Boğaziçi University
Department of Economics
Spring 2016
EC 102 PRINCIPLES of MACROECONOMICS
Problem Set 4 – Answer Key
1.
Productivity is the amount of goods and services
a.
an economy produces. It is not linked to a nation’s economic policies.
b.
an economy produces. It is linked to a nation’s economic policies.
c.
produced for each hour of a worker’s time. It is not linked to a nation’s economic policies.
d.
produced for each hour of a worker’s time. It is linked to a nation’s economic policies.
ANSWER: d
2.
Which of the following can be measured by the level of real GDP per person?
a.
productivity and the standard of living
b.
productivity but not the standard of living
c.
the standard of living but not productivity
d.
neither the standard of living nor productivity
ANSWER: c
3.
Last year real GDP per person in the imaginary nation of Olympus was 4,250. The year before it was
4,100. By
about what percentage did Olympian real GDP per person grow during the period?
a.
1.6 percent
b.
2.5 percent
c.
3.7 percent
d.
6 percent
ANSWER: c
4.
Last year the imaginary nation of Freedonia had a population of 2,800 and real GDP of 16,800,000. This
year it had a
population of 2,700 and real GDP of 15,390,000. About what was the growth rate of real
GDP per person between
last year and this year?
a.
–5.3 percent
b.
-5 percent
c.
5 percent
d.
5.3 percent
ANSWER: b
5.
In 2011, the imaginary nation of Maconia had a population of 8,200 and real GDP of 210,500. Maconia had 5%
growth in real GDP per person. In 2012 it had a population of 8,400. To the nearest dollar what was real GDP
in
Maconia in 2012?
a. 216,815
b. 221,025
c. 226,416
d. None of the above is correct.
ANSWER: c
6.
In 2010, the imaginary nation of Bovina had a population of 5,000 and real GDP of 500,000. In 2011 it had a
population of 5,100 and real GDP of 520,200. During 2011 real GDP per person in Bovina 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.
ANSWER: c
7.
In 2012, the imaginary nation of Platland had a population of 10,000 and real GDP of 42,000,000. During the
year its
real GDP per person grew by about 1.94%. Which of the following sets of growth rates is consistent
with this
growth in real GDP per person?
a.
3% population growth and 4% real GDP growth
b.
3% population growth and 5% real GDP growth
c.
6% population growth and 4% real GDP growth
d.
6% population growth and 5% real GDP growth
ANSWER: b
8.
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.
ANSWER: b
9.
Over the last ten years productivity grew more slowly in Iberia than in Aire while the population and total hours
worked remained the same in both countries. It follows that
a.
real GDP per person must be lower in Iberia than in Aire.
b.
real GDP per person grew more slowly in Iberia than in Aire.
c.
the standard of living must be higher in Iberia than in Aire.
d.
All of the above are correct.
ANSWER: b
10.
Which of the following can explain faster growth of real GDP in country A than in Country B?
a.
both greater population growth and greater productivity growth in Country A
b.
greater population growth in Country A, but not greater productivity growth in Country A
c.
greater productivity growth in Country A, but not greater population growth in Country A
d.
neither greater population growth nor greater productivity growth in Country A
ANSWER: a
11.
Miller’s Dairy produces 960 gallons of milk per day. Each milker at the dairy works 8 hours per day and
produces
the same number of gallons of milk per hour. If the Dairy’s productivity is 12 gallons of milk per hour
of labor, then
how many milkers does the shop employ?
a.
8
b.
10
c.
80
d.
120
ANSWER: b
12.
Alexis and Tara both mine salt. Alexis mines 300 pounds in 20 hours. Tara mines 400 pounds in 40 hours.
Which of
the following is correct?
a.
Alexis’s productivity is greater than Tara’s. This difference could be explained by Alexis having more
physical capital than Tara.
b.
Alexis’s productivity is greater than Tara’s. This difference cannot be explained by a difference in the
physical capital each has.
c.
Tara’s productivity is greater than Alexis’s. This difference could be explained by Tara having more
physical
capital than Alexis.
d.
Tara’s productivity is greater than Alexis’s. This difference cannot be explained by a difference in the
physical capital each has.
ANSWER: a
13. Daniel owns a coffee kiosk. All of his employees work 8 hours per day. In 2011, he employed 6 people who
produced a total of 912 cups of coffee each day. In 2012, he hired a seventh employee and production
increased to
1008 cups of coffee each day. In Daniel’s kiosk, productivity
a. increased by about 10.5 percent
b. increased by 9.5 percent
c. decreased by about 5.6 percent
d. decreased by about 5.3 percent
ANSWER: d
14. In 2011, Modern Electronics, Inc. produced 60,000 calculators, employing 80 workers, each of whom worked 8
hours per day. In 2012, the same firm produced 76,500 calculators, employing 85 workers, each of whom
worked
10 hours per day. Productivity at Modern Electronics
a.
decreased by 4%
b.
remained constant.
c.
increased by 8.33%
d.
increased by 27.50%
ANSWER: a
15. 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.
ANSWER: b
16. Country A had a population of 2,000, of whom 1,300 worked an average of 8 hours a day and had a
productivity of 5.Country B had a population of 2,500, of whom 1,700 worked 8 hours a day and had
productivity of 4. Country
a.
A had the higher level of real GDP and real GDP per person.
b.
A had the higher level of real GDP and Country B had the higher level of real GDP per person
c.
B had the higher level of real GDP and Country A had the higher level of real GDP per person
d.
B had the higher level of real GDP and real GDP per person.
ANSWER: c
17. 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.
ANSWER: a
18. Janet is a farmer. Which of the following are included in her human capital?
a. her tractor and what she’s learned from experience
b. her tractor but not what she’s learned from experience
c. what she’s learned from experience but not her tractor
d. neither her tractor nor what she’s learned from experience
ANSWER: c
19. Which of the following lists contains, in this order, natural resources, human capital, and physical capital?
a. For a restaurant: the land the restaurant was built on, the money it borrowed to buy supplies,
the freezers
where the chops and steaks are kept.
b. For a furniture company: wood, the skills and knowledge of its workers, saws.
c. For a railroad: fuel, railroad engines, railroad tracks.