1698 ? Chapter 25 /Production and Growth
34. In 2006, the imaginary nation of Viloxia had a population of 5,000 and real GDP of 500,000. In 2007 it had a
population of 5,100 and real GDP of 520,200. Over the year in question, real GDP per person in Viloxia grew by
a. 2 percent, which is high compared to average U.S. growth over the last one-hundred years. b. 2 percent, which is about the same as average U.S. growth over the last one-hundred years. c. 4 percent, which is high compared to average U.S. growth over the last one-hundred years. d. 4 percent, which is about the same as average U.S. growth over the last one-hundred years.
ANS: B
NAT: Analytic MSC: Applicative
DIF: 3 REF: 25-1 LOC: Productivity and growth TOP:
Economic growth
35. Last year Panglossia had real GDP of 27.0 billion. This year it had real GDP of 31.5 billion. Which of the
following changes in population is consistent with a 5 percent growth rate of real GDP per person over the last year?
a. The population decreased from 88 million to 84 million. b. The population decreased from 75 million to 73 million. c. The population increased from 45 million to 50 million. d. The population increased from 60 million to 62 million.
ANS: C
NAT: Analytic MSC: Analytical
DIF: 3 REF: 25-1 LOC: Productivity and growth TOP:
Economic growth
36. Which of the following is indicated by the data on real income per person for various countries over the past
100 or so years?
a. If, in a relatively poor country, real income per person had grown by 3.5 percent per year for the
last 100 years, it would be a relatively rich country today.
b. Rich countries became richer and poor countries became poorer.
c. In the United States, real income per person today is about four times as high as it was 100 years
ago.
d. All of the above are correct.
ANS: A
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 25-1 LOC: Productivity and growth TOP:
Economic growth
37. Which of the following is not correct?
a. Across countries there are large differences in the average income per person. These differences
are reflected in large differences in the quality of life.
b. With a growth rate of about 2 percent per year, average income per person doubles about every 35
years.
c. The ranking of countries by average income changes very little over time.
d. In some countries real income per person has changed very little over many years.
ANS: C
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 25-1 LOC: Productivity and growth TOP:
Income | Economic growth
Sec02 - Production and Growth - Productivity: Its Role and Determinants
MULTIPLE CHOICE1.
The one variable that stands out as the most significant explanation of large variations in living standards around the world is a. productivity. b. population. c. preferences. d. prices.
ANS: A DIF: 1 REF: 25-2 NAT: Analytic LOC: Productivity and growth TOP: Productivity | Standard of living MSC: Interpretive
Chapter 25 /Production and Growth ? 1699
2.
In determining living standards, productivity plays a key role
a. for individuals, but not for nations. b. for nations, but not for individuals. c. for both nations and individuals. d. for neither nations nor individuals.
ANS: C DIF: 1 REF: 25-2 NAT: Analytic LOC: Productivity and growth TOP: Standard of living | Productivity MSC: Interpretive3.
The quantity of goods and services produced from each unit of labor input is called
a. standard of living. b. productivity.
c. capitalized quantity. d. the knowledge base.
DIF: 1 REF: 25-2 LOC: Productivity and growth TOP:
ANS: B
NAT: Analytic MSC: Definitional4.
Productivity
Productivity is defined as
a. the amount of difficulty that is involved in producing a given quantity of goods and services. b. the quantity of labor that is required to produce one unit of goods and services. c. the quantity of goods and services produced from each unit of labor input. d. the quantity of goods and services produced over a given amount of time.
DIF: 1 REF: 25-2 LOC: Productivity and growth TOP:
ANS: C
NAT: Analytic MSC: Definitional5.
Productivity
Which of the following is correct?
a. Although levels of real GDP per person vary substantially from country to country, the growth rate
of real GDP per person is similar across countries.
b. Productivity is not closely linked to government policies.
c. The level of real GDP per person is a good gauge of economic prosperity, and the growth rate of
real GDP per person is a good gauge of economic progress.
d. Productivity may be measured by the growth rate of real GDP per person.
DIF: 2 REF: 25-2 LOC: Productivity and growth TOP:
ANS: C
NAT: Analytic MSC: Interpretive6.
Economic growth
Perry accumulated a lot of mathematical skills while in high school, college, and graduate school. Economists include these skills as part of Perry’s a. standard of learning. b. technological knowledge. c. physical capital. d. human capital.
DIF: 2 REF: 25-2 LOC: Productivity and growth TOP:
ANS: D
NAT: Analytic MSC: Definitional7.
Human capital
What term do economists use to describe the relationship between the quantity of inputs used and the quantity of output produced? a. production function b. input function c. capital function d. returns to scale
ANS: A DIF: 1 REF: 25-2 NAT: Analytic LOC: The Study of economics, and definitions of economics TOP: Production function MSC: Definitional
1700 ? Chapter 25 /Production and Growth
8.
Which of the following items plays a role in determining productivity?
a. physical capital b. natural resources
c. technological knowledge d. All of the above are correct.
DIF: 1 REF: 25-2 LOC: Productivity and growth TOP:
ANS: D
NAT: Analytic MSC: Interpretive9.
Productivity
Technological knowledge
a. is the same thing as human capital.
b. can be discovered but it can never be kept secret. c. is a determinant of productivity.
d. does not play a role in the relationship that economists call the production function.
DIF: 2 REF: 25-2 LOC: Productivity and growth TOP:
ANS: C
NAT: Analytic MSC: Interpretive
Technology
10. Industrial machinery is an example of
a. a factor of production that in the past was an output from the production process. b. technological knowledge. c. a production function.
d. an item which always has the property called constant returns to scale.
ANS: A DIF: 2 REF: 25-2 NAT: Analytic LOC: The Study of economics, and definitions of economics TOP: Physical capital MSC: Interpretive
11. Industrial machinery is an example of
a. a factor of production that in the past was an output from the production process. b. physical capital.
c. something that influences productivity. d. All of the above are correct.
ANS: D DIF: 2 REF: 25-2 NAT: Analytic LOC: The Study of economics, and definitions of economics TOP: Physical capital | Productivity MSC: Interpretive
12. Which of the following statements about inputs is correct?
a. A forest is an example of a natural resource; it is also an example of a renewable resource. b. There is no distinction between human capital and technological knowledge. c. Human capital is a non-produced factor of production. d. Physical capital is a non-produced factor of production.
ANS: A
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 25-2 LOC: Productivity and growth TOP:
Inputs
13. Despite its status as one of the richest countries in the world, Japan
a. has a very low level of productivity. b. has few natural resources. c. has very little human capital.
d. engages in a relatively small amount of international trade.
ANS: B
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 25-2 LOC: Productivity and growth TOP:
Natural resources
Chapter 25 /Production and Growth ? 1701
14. The notion that our ability to conserve natural resources is growing more rapidly than their supplies are
dwindling is supported by the fact that
a. most economists do not regard the availability of natural resources as a determinant of productivity. b. the quantity of natural resources does not enter into any production function. c. inflation-adjusted prices of natural resources are stable or falling over time. d. inflation-adjusted prices of natural resources are rising over time.
ANS: C
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 25-2 LOC: Productivity and growth TOP:
Natural resources
15. Which of the following statements is correct?
a. By definition, all natural resources are nonrenewable.
b. Market prices give us reason to believe that natural resources are a limit to economic growth. c. An economy must be blessed with ample quantities of natural resources if it is to be a highly
productive economy.
d. Differences in natural resources can explain some of the differences in standards of living around
the world.
ANS: D
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 25-2 LOC: Productivity and growth TOP:
Natural resources
16. The average amount of goods and services produced from each hour of a worker's time is called
a. GDP.
b. per capita GDP. c. productivity.
d. technological knowledge.
ANS: C
NAT: Analytic MSC: Definitional
DIF: 1 REF: 25-2 LOC: Productivity and growth TOP:
Productivity
17. For a given year, productivity in a particular country is most closely matched with that country's
a. level of real GDP over that year.
b. level of real GDP divided by hours worked over that year.
c. growth rate of real GDP divided by hours worked over that year. d. growth rate of real GDP per person over that year.
ANS: B
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 25-2 LOC: Productivity and growth TOP:
Productivity | Real GDP
18. Productivity
a. is nearly the same across countries, and so provides no help explaining differences in the standard
of living across countries.
b. explains very little of the differences in the standard of living across countries.
c. explains some, but not most of the differences in the standard of living across countries. d. explains most of the differences in the standard of living across countries.
ANS: D
NAT: Analytic MSC: Interpretive
DIF: 2 REF: 25-2 LOC: Productivity and growth TOP:
Productivity
19. Which of the following is a correct way to measure productivity?
a. Divide the number of hours worked by the quantity of output. b. Divide the quantity of output by the number of hours worked. c. Divide the quantity of output by the quantity of physical capital.
d. Divide the change in the quantity of output by the change in the number of hours worked.
ANS: B
NAT: Analytic MSC: Definitional
DIF: 1 REF: 25-2 LOC: Productivity and growth TOP:
Productivity
1702 ? Chapter 25 /Production and Growth
20. Cedar Valley Furniture uses 5 workers, each working 8 hours, to produce 80 rocking chairs. What is the
productivity of these workers? a. 2 chairs per hour b. 10 chairs per hour c. 1 hour per chair d. 80 chairs
ANS: A
NAT: Analytic MSC: Applicative
DIF: 1 REF: 25-2 LOC: Productivity and growth TOP:
Productivity
21. In one day Alpha Cabinet Company made 40 cabinets with 320 hours of labor. What was their productivity?
a. 1/8 cabinet per hour b. 8 hours per cabinet c. 40 cabinets
d. None of the above is correct.
ANS: A
NAT: Analytic MSC: Applicative
DIF: 2 REF: 25-2 LOC: Productivity and growth TOP:
Productivity
22. You and your friend work together for 4 hours to produce a total of 12 futons. What is productivity?
a. 12 futons b. 24 futons
c. 3 futons per hour of labor d. 1.5 futons per hour of labor
ANS: D
NAT: Analytic MSC: Applicative
DIF: 2 REF: 25-2 LOC: Productivity and growth TOP:
Productivity
23. A barber shop produces 96 haircuts a day. Each barber in the shop works 8 hours per day and produces the
same number of haircuts per hour. If the shop’s productivity is 3 haircuts per hour of labor, then how many barbers does the shop employ? a. 2 b. 3 c. 4 d. 6
ANS: C
NAT: Analytic MSC: Applicative
DIF: 2 REF: 25-2 LOC: Productivity and growth TOP:
Productivity
24. Nathan owns a bakery that bakes only cakes. All of his bakers work 8 hours per day. In 2006, he employed
5 bakers and they produced 200 cakes each day. In 2007, he employed 6 bakers and they produced 249 cakes each day. In Nathan’s bakery, productivity a. decreased by 2.33 percent between 2006 and 2007. b. increased by 2.33 percent between 2006 and 2007. c. increased by 3.75 percent between 2006 and 2007. d. increased by 24.50 percent between 2006 and 2007.
ANS: C
NAT: Analytic MSC: Applicative
DIF: 2 REF: 25-2 LOC: Productivity and growth TOP:
Productivity