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35. In 2004 Empira had a population of 5,000 and real GDP of 500,000. In 2005 it had a population of 5,100 and real
GDP of about 520,200. So, real GDP per person in Empira grew at about
a. 2%, which is high compared to average US growth over the last one-hundred years. b. 2%, which is about the same as average US growth over the last one-hundred years. c. 4% which is high compared to average US growth over the last one-hundred years. d. 4% which is about the same as average US growth over the last one-hundred years. ANS: B PTS: 1 DIF: 1 REF: 25-1 TOP: Growth rates MSC: Applicative 36. Last year Panglossia had real GDP of 3000 billion. This year it had real GDP of 3116 billion. Which of the following
values of population would be consistent with a 2.5% growth rate of real GDP per person? a. The population fell from 76 million to 75 million. b. The population rose from 75 million to 76 million. c. The population fell from 80 million to 78 million. d. The population rose from 80 million to 78 million. ANS: B PTS: 1 DIF: 3 REF: 25-1 TOP: Growth rates MSC: Analytical 37. Which of the following is correct?
a. If a relatively poor country had grown at 3.5 percent per year for the last 100 years, it would be a relatively rich
country today.
b. International data on the history of the growth of real GDP per person shows that the rich countries get richer and
the poor countries get poorer.
c. In the United States, average income today is about four times as high as average income a century ago. d. All of the above are correct. ANS: A PTS: 1 DIF: 2 REF: 25-1 TOP: Economic growth around the world MSC: Definitional 38. The average amount of goods and services produced from each hour of a worker's time is called
a. per capita GDP b. per capita GNP c. productivity d. human capital ANS: C PTS: 1 DIF: 1 REF: 25-2 TOP: Productivity MSC: Definitional 39. Productivity is most closely matched with a country's
a. Level of real GDP.
b. Level of real GDP divided by hours worked.
c. Growth rate of real GDP divided by hours worked. d. Growth rate of real GDP per person. ANS: B PTS: 1 DIF: 1 REF: 25-2 TOP: Productivity | Real GDP per person
MSC: Interpretive
40. 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 PTS: 1 DIF: 2 REF: 25-2 TOP: Productivity MSC: Interpretive 41. Which of the following is a correct way to measure productivity?
a. divide the number of hours worked by output b. divide output by the number of hours worked c. compute output growth
d. divide the change in output by the change in number of hours worked ANS: B PTS: 1 DIF: 1 REF: 25-2 TOP: Productivity MSC: Analytical
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42. Cedar Valley Furniture uses 5 workers working 8 hours to produce 80 rocking chairs. What is the productivity of
these workers?
a. 2 chairs per hour. b. 1 hour per chair. c. 80 chairs.
d. None of the above is correct. ANS: A PTS: 1 DIF: 1 REF: 25-2 TOP: Productivity MSC: Analytical 43. 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 PTS: 1 DIF: 2 REF: 25-2 TOP: Productivity MSC: Analytical 44. Consider two countries. Country A has a population of 1,000, of whom 800 work 8 hours a day to make 128,000 final
goods. Country B has a population of 2,000 of whom 1,800 work 6 hours a day to make 270,000 final goods a. Country A has higher productivity and higher real GDP per person than country B. b. Country A has lower productivity and lower real GDP per person than country B. c. Country A has higher productivity, but lower real GDP per person than country B. d. Country B has lower productivity, but higher real GDP per person than country B. ANS: B PTS: 1 DIF: 2 REF: 25-2 TOP: Productivity MSC: Analytical 45. Libeteria has a population of 10,000, of whom 7,000 work 8 hours a day to produce a total of 224,000 final goods.
Despotvanyla has a population of 5,000, of whom 4,000 work 12 hours a day to produce a total of 120,000 final goods.
a. Libeteria has higher productivity and higher real GDP per person than Despotvanyla. b. Libeteria has higher productivity but lower real GDP per person than Despotvanyla. c. Libeteria has lower productivity but higher real GDP per person than Despotvanyla. d. Libeteria has lower productivity and lower real GDP per person than Despotvanyla. ANS: A PTS: 1 DIF: 2 REF: 25-2 TOP: Productivity | Real GDP per person MSC: Analytical 46. Which of the following is true?
a. Productivity is hours worked divided by output produced.
b. Americans have a higher standard of living than Indonesians because American workers are more productive
than Indonesian workers.
c. Trends in the market prices of most resources indicate that they have become increasingly scarce over time. d. All of the above are correct. ANS: B PTS: 1 DIF: 1 REF: 25-2 TOP: Productivity MSC: Definitional 47. Which of the following is not correct?
a. Countries that have had higher output growth per person have typically done so without higher productivity
growth.
b. A country's standard of living and its productivity are closely related. c. Productivity refers to output produced per hour of work.
d. Increases in productivity can be used to increase output or leisure. ANS: A PTS: 1 DIF: 1 REF: 25-2 TOP: Productivity MSC: Definitional
Chapter 25/Production and Growth ? 1053
48. Both Tom and Jerry work eight hours a day. Tom can produce six baskets of goods per hour while Jerry can produce
four baskets of the same goods per hour. It follows that Tom's a. productivity is greater than Jerry's. b. output is greater than Jerry's.
c. standard of living is higher than Jerry's. d. All of the above are correct. ANS: D PTS: 1 DIF: 1 REF: 25-2 TOP: Productivity | Standard of living MSC: Definitional 49. Waldo works eight hours and produces 7 units of goods per hour. Emerson works six hours and produces 10 units of
goods per hour.
a. Waldo’s productivity and output are greater than Emerson’s.
b. Waldo’s productivity is greater than Emerson’s but his output is less. c. Emerson’s productivity and output are greater than Waldo’s.
d. Emerson’s productivity is greater than Waldo’s but his output is less. ANS: C PTS: 1 DIF: 2 REF: 25-2 TOP: Productivity MSC: Analytical 50. Mary looks over reports on four of her workers. Jack made 25 baskets in 5 hours. Walter made 36 baskets in 6 hours.
Rudy made 40 baskets in 10 hours. Sam made 22 baskets in four hours. Who has the greatest productivity? a. Jack b. Walter c. Rudy d. Sam ANS: B PTS: 1 DIF: 1 REF: 25-2 TOP: Productivity MSC: Analytical 51. Real Foods produced 300,000 boxes of organic spiral noodles in 2004 and produced 360,000 boxes in 2005. They
used the same total hours of work in each year. In 2005 their productivity a. fell.
b. was the same as in 2004. c. rose 20%. d. rose 30%. ANS: C PTS: 1 DIF: 1 REF: 25-2 TOP: Productivity MSC: Applicative 52. Dilbert’s Incorporated produced 5,000,000 units of accounting software in 2004. At the start of 2005 the
pointy-haired boss reduced total annual hours of employment from 10,000 to 8,000 and production was 4,800,000. These numbers indicate that productivity a. fell by 4%. b. fell by 20%. c. rose by 12%. d. rose by 20%. ANS: D PTS: 1 DIF: 2 REF: 25-2 TOP: Productivity MSC: Applicative 53. Dilbert’s Incorporated produced 6,000,000 units of software in 2005. At the start of 2006 pointy-haired boss raised
employment from 10,000 total annual hours to 14,000 annual hours and production was 7,000,000 units. Based on these numbers what happened to productivity? a. It fell by about 16.7%. b. It stayed the same. c. It rose by about 16.7%. d. It rose by about 40%. ANS: A PTS: 1 DIF: 2 REF: 25-2 TOP: Productivity MSC: Applicative
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54. The key determinant of a person's standard of living in a country is
a. the amount of goods and services produced from each hour of a worker's time. b. the total amount of goods and services produced within the country. c. the total amount of its physical capital. d. its growth rate of real GDP. ANS: A PTS: 1 DIF: 1 REF: 25-2 TOP: Productivity | Real GDP per person MSC: Interpretive 55. Which of the following is a determinant of productivity?
a. human capital per worker b. physical capital per worker c. natural resources per worker d. All of the above are correct. ANS: D PTS: 1 DIF: 1 REF: 25-2 TOP: Standard of living | Productivity MSC: Definitional 56. The inputs used to produce goods and services are also called
a. productivity indicators. b. capitalization producers. c. production functions. d. factors of production. ANS: D PTS: 1 DIF: 1 REF: 25-2 TOP: Factors of production MSC: Definitional
57. The Peapod Restaurant uses all of the following to produce vegetarian meals. Which of them is an example of
physical capital?
a. The owner's knowledge of how to prepare vegetarian entrees.
b. The money in the owner's account at the bank she borrowed money from. c. The tables and chairs in the restaurant. d. The land the restaurant was built on. ANS: C PTS: 1 DIF: 1 REF: 25-2 TOP: Capital MSC: Definitional 58. The equipment and structures available to produce goods and services are called
a. physical capital. b. human capital.
c. the production function. d. technology. ANS: A PTS: 1 DIF: 1 REF: 25-2 TOP: Capital MSC: Definitional
59. The saws, lathes, and drill presses that woodworkers at Cedar Valley Furniture use to produce furniture are called
a. human capital. b. physical capital. c. natural resources.
d. technological knowledge. ANS: B PTS: 1 DIF: 1 REF: 25-2 TOP: Capital MSC: Definitional 60. Which of the following would not be considered physical capital?
a. a new factory building
b. a computer used to help Mercury Delivery Service keep track of its orders c. on-the-job training
d. a desk used in an accountant's office ANS: C PTS: 1 DIF: 1 REF: 25-2 TOP: Capital MSC: Definitional
Chapter 25/Production and Growth ? 1055
61. Which of the following is physical capital?
a. the strength of workers b. the knowledge of workers
c. financial assets like cash and bonds d. the equipment in a factory ANS: A PTS: 1 DIF: 1 REF: 25-2 TOP: Productivity | Capital MSC: Definitional 62. Which of the following would be considered physical capital?
a. the pizza oven at the Liquidity Preferences Tavern b. rivers on which goods are transported c. the skills and knowledge of a barber d. All of the above are correct. ANS: A PTS: 1 DIF: 1 REF: 25-2 TOP: Capital MSC: Definitional
63. Human capital is the
a. knowledge and skills that workers acquire through education, training, and experience. b. stock of equipment and structures that is used to produce goods and services. c. total number of hours worked in an economy. d. same thing as technological knowledge. ANS: A PTS: 1 DIF: 1 REF: 25-2 TOP: Capital MSC: Definitional 64. Which of the following is considered human capital?
a. knowledge acquired from early childhood education programs b. knowledge acquired from grade school
c. knowledge acquired from on-the-job training d. All of the above are correct. ANS: D PTS: 1 DIF: 1 REF: 25-2 TOP: Capital MSC: Definitional 65. Which of the following is human capital?
a. a student loan
b. understanding how to use a company's accounting software c. training videos for new corporate employees d. All of the above are correct. ANS: B PTS: 1 DIF: 2 REF: 25-2 TOP: Capital MSC: Definitional
66. Which of the following is considered human capital?
a. the comfortable chair in your dorm room where you read economics texts b. the amount you get paid each week to work at the library c. the things you have learned this semester
d. any capital goods that require a human to be present to operate ANS: C PTS: 1 DIF: 1 REF: 25-2 TOP: Capital MSC: Definitional
67. Which of the following best illustrates the human capital of a survivor stranded on an island?
a. The fishing poles she has produced. b. The invention of a better fishing lure.
c. The fresh fruit and fish on and around the island. d. Her previous training in a survival course. ANS: D PTS: 1 DIF: 1 REF: 25-2 TOP: Capital MSC: Interpretive