19) Human capital refers to the
A) accumulated skill and knowledge of human beings.
B) accumulated equipment used by human beings.
C) accumulation of money by human beings.
D) accumulation of money and equipment used by human beings.
E) accumulated inancial capital people have acquired.
Skill: Level 1: Deinition
Section: Checkpoint 9.2
Status: Old
AACSB: Relective thinking
20) Human capital is deined as the
A) amount of machinery human beings have.
B) number of factories built for human beings.
C) accumulated skill and knowledge of human beings.
D) accumulated amount of machinery and factories human beings own.
E) skills that people are born with.
Skill: Level 1: Deinition
Section: Checkpoint 9.2
Status: Old
AACSB: Relective thinking
21) Increases in human capital can come
A) only from formal schooling.
B) from employing more machinery.
C) only from on-the-job experience.
D) from formal education and on-the-job learning.
E) from nowhere because whatever human capital an individual possesses is what he or she
was born with.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.2
Status: Old
AACSB: Relective thinking
31
22) Expansion of a nation’s human capital can be achieved through
A) education and training.
B) education and saving.
C) education and technology improvements.
D) education only.
E) nothing because human capital is determined by the skills people are born with.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.2
Status: Old
AACSB: Relective thinking
23) Human capital is acquired
A) only in school.
B) only through on-the-job training.
C) only through job experience.
D) through schooling, job training, and experience.
E) only at birth, that is, it’s people’s inborn talents.
Skill: Level 1: Deinition
Section: Checkpoint 9.2
Status: Old
AACSB: Relective thinking
24) Advances in technology and growth in human capital ________ because ________.
A) shift the productivity curve downward; labor and capital become less productive
B) shift the productivity curve downward; labor and capital become more productive
C) shift the productivity curve upward; labor and capital become less productive
D) shift the productivity curve upward; labor and capital become more productive
E) do not shift the productivity curve; there is a movement along the productivity curve
Skill: Level 2: Using deinitions
Section: Checkpoint 9.2
Status: New
AACSB: Relective thinking
32
25) The expansion of human capital and the discovery of new technologies ________ because
________.
A) are subject to diminishing returns; they shift the productivity curve downward
B) are subject to diminishing returns; they shift the productivity curve upward
C) are not subject to diminishing returns; they shift the productivity curve downward
D) are not subject to diminishing returns; they shift the productivity curve upward
E) are not subject to diminishing returns; they result in a movement along the productivity
curve
Skill: Level 2: Using deinitions
Section: Checkpoint 9.2
Status: New
AACSB: Relective thinking
26) Labor productivity increases if
i. human capital decreases.
ii. technology advances.
iii. quality of education decreases.
A) i only
B) ii only
C) iii only
D) Both i and ii
E) Both ii and iii
Skill: Level 2: Using deinitions
Section: Checkpoint 9.2
Status: Old
AACSB: Relective thinking
27) ________ increases with education, training, and job experience.
i. Physical capital
ii. Human capital
iii. Financial capital
A) i only
B) ii only
C) iii only
D) both ii and iii
E) i, ii, and iii
Skill: Level 1: Deinition
Section: Checkpoint 9.2
Status: Old
AACSB: Relective thinking
33
28) U.S. labor productivity slowed during the 1970s because of
i. increasing government taxes and regulations on production.
ii. the necessity to cope with energy price increases.
iii. inlation, which shortened the horizon over which businesses made their borrowing
plans.
A) i only
B) ii only
C) iii only
D) Both i and ii
E) i, ii, and iii
Skill: Level 2: Using deinitions
Section: Checkpoint 9.2
Status: Old
AACSB: Relective thinking
29) Over the last 50 years, U.S. labor productivity grew the fastest during the ________
because of ________.
A) 1900s; the war on terror and return to the basics of education
B) 1990s; advancements in healthcare due to the unlocking of the human genome
C) 1980s; the invention of the computer and the oil embargo
D) 1970s; an increase in government taxes and expanded regulations
E) 1960s; fast paced technological change and large increases in human capital
accumulation
Skill: Level 2: Using deinitions
Section: Checkpoint 9.2
Status: New
AACSB: Relective thinking
30) The law of diminishing marginal returns states that
A) output increases at a constant rate as more capital is added.
B) output decreases at a constant rate as more capital is added.
C) as both labor and capital are increased, output does not change.
D) as both labor and capital are increased, output increases at a decreasing rate.
E) output increases at a decreasing rate as more capital is added.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.2
Status: Old
AACSB: Relective thinking
34
31) According to the law of diminishing returns, an additional unit of
A) capital produces more output than an additional unit of labor.
B) labor decreases output.
C) capital produces the same amount of output as an additional unit of labor.
D) capital produces more output than the previous unit.
E) capital produces less output than the previous unit.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.2
Status: Old
AACSB: Relective thinking
32) The shape of the productivity curve relects the
A) efects of capital accumulation.
B) efects of technological progress.
C) change in labor productivity as human capital increases.
D) law of diminishing marginal returns.
E) efects of population growth.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.2
Status: Old
AACSB: Relective thinking
33) The productivity curve is a relationship between
A) real GDP per hour of labor and capital per hour of labor, with technology held constant.
B) nominal GDP per hour of labor and capital per hour of labor, with technology held
constant.
C) real GDP per hour of labor and capital per hour of labor whenever technological growth
occurs.
D) real GDP per unit of capital and capital per hour of labor, with technology held constant.
E) capital per hour of labor and technological growth.
Skill: Level 1: Deinition
Section: Checkpoint 9.2
Status: Old
AACSB: Relective thinking
35
34) The productivity curve is a relationship between ________ and ________.
A) real GDP; hours of labor
B) real GDP; capital
C) real GDP per hour of labor; capital
D) capital per hour of labor; labor per hour of capital
E) real GDP per hour of labor; capital per hour of labor
Skill: Level 1: Deinition
Section: Checkpoint 9.2
Status: Old
AACSB: Relective thinking
35) A diagram of a productivity curve has
A) real GDP per hour of labor on the y-axis and capital per hour of labor on the x-axis.
B) real GDP per hour of labor on the y-axis and hours of labor on the x-axis.
C) capital per hour of labor on the y-axis and real GDP per hour of labor on the x-axis.
D) real wages per hour on the y-axis and real GDP per hour of labor on the x-axis.
E) real GDP per hour of labor on the y-axis and real wages per hour on the x-axis.
Skill: Level 1: Deinition
Section: Checkpoint 9.2
Status: Old
AACSB: Relective thinking
36) The productivity curve
A) has a positive slope.
B) has a negative slope.
C) is vertical.
D) is horizontal.
E) is U-shaped.
Skill: Level 1: Deinition
Section: Checkpoint 9.2
Status: Old
AACSB: Relective thinking
36
37) Suppose that an Intel worker rearranges existing machines and labor and increases the
quantity of chips Intel can produce. Using the productivity curve graphed, this innovation
would be described as
A) a movement upward along the curve.
B) a movement downward along the curve.
C) a shift of the curve upward.
D) a shift of the curve downward.
E) no change to the productivity curve.
Skill: Level 3: Using models
Section: Checkpoint 9.2
Status: Old
AACSB: Analytical thinking
38) If capital per hour of labor increases, GDP per hour of labor
A) decreases for a given level of technology.
B) increases because the level of technology advances.
C) increases for a given level of technology.
D) decreases because the level of technology decreases.
E) changes only if technology also advances.
Skill: Level 3: Using models
Section: Checkpoint 9.2
Status: Old
AACSB: Analytical thinking
39) If capital per hour of labor decreases, real GDP per hour of labor
A) decreases because the level of technology decreases.
B) increases because the level of technology increases.
C) increases for a given level of technology.
D) decreases for a given level of technology.
E) changes only if technology also advances.
Skill: Level 3: Using models
Section: Checkpoint 9.2
Status: Old
AACSB: Analytical thinking
37
40) If the level of technology rises, GDP per hour of labor
A) increases for any level of capital per hour of labor.
B) increases because the level of capital per hour of labor increases.
C) decreases for a given level of capital per hour of labor.
D) decreases because the level of capital per hour of labor decreases.
E) does not change because GDP increases only when capital or labor increases.
Skill: Level 3: Using models
Section: Checkpoint 9.2
Status: Old
AACSB: Analytical thinking
41) A technological change ________ and a change in the capital stock ________.
A) shifts the productivity curve; shifts the productivity curve
B) shifts the productivity curve; creates a movement along the productivity curve
C) creates a movement along the productivity curve; shifts the productivity curve
D) does not change the productivity curve; creates a movement along the productivity
curve
E) does not change the productivity curve; shifts the productivity curve
Skill: Level 4: Applying models
Section: Checkpoint 9.2
Status: Old
AACSB: Analytical thinking
42) The expansion of human capital and the discovery of new technologies ________ because
________.
A) decrease real GDP; they shift the productivity curve downward
B) decrease real GDP; they shift the productivity curve upward
C) increase real GDP; they shift the productivity curve downward
D) increase real GDP; they shift the productivity curve upward
E) increase real GDP; they result in a movement upward along the productivity curve
Skill: Level 2: Using deinitions
Section: Checkpoint 9.2
Status: New
AACSB: Relective thinking
38
43) Increases in capital per worker ________ because ________.
A) increase real GDP; they shift the productivity curve downward
B) increase real GDP; they shift the productivity curve upward
C) increase real GDP; they create a movement downward along the productivity curve
D) increase real GDP; they create a movement upward along the productivity curve
E) may increase or decrease real GDP; the result is a movement along the productivity
curve but the direction depends on other factors not given
Skill: Level 2: Using deinitions
Section: Checkpoint 9.2
Status: New
AACSB: Relective thinking
44) Labor productivity equals ________.
A) real GDP × aggregate hours
B) real GDP ÷ aggregate hours
C) aggregate hours ÷ real GDP
D) aggregate hours × labor productivity
E) aggregate hours ÷ labor productivity
Skill: Level 1: Deinition
Section: Checkpoint 9.2
Status: Old
AACSB: Relective thinking
45) Labor productivity equals
A) real GDP divided by the capital stock.
B) real GDP divided by the population.
C) total wages divided by real GDP.
D) real GDP divided by aggregate hours.
E) aggregate hours divided by employment.
Skill: Level 1: Deinition
Section: Checkpoint 9.2
Status: Old
AACSB: Relective thinking
39
46) If real GDP is $1,200 billion, the population is 60 million, and aggregate hours are 80
billion, labor productivity is
A) $5.00 an hour.
B) $6.67 an hour.
C) $15.00 an hour.
D) $20,000.
E) $150 an hour.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.2
Status: Old
AACSB: Relective thinking
47) If aggregate hours are 100 billion hours and labor productivity is $40 an hour, than real
GDP equals
A) $100 billion.
B) $40 billion.
C) $100 trillion.
D) $2.5 trillion.
E) $4 trillion.
Skill: Level 2: Using deinitions
Section: Checkpoint 9.2
Status: Old
AACSB: Analytical thinking
48) Which of the following lists gives factors that increase labor productivity?
A) saving and investment in physical capital, and wage increases
B) expansion of human capital, labor force increases, and discovery of new technologies
C) expansion of human capital, population growth, and discovery of new technologies
D) saving and investment in physical capital, expansion of human capital, and discovery of
new technologies
E) labor force increases and wage increases
Skill: Level 1: Deinition
Section: Checkpoint 9.2
Status: Old
AACSB: Relective thinking
40