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True / False
1. Real GDP per person in rich countries, such as Germany, is sometimes more than 10 times that of poor countries like
India.
a.
True
b.
False
2. If per capita real income grows by 2 percent per year, then it will double in approximately 20 years.
a.
True
b.
False
3. Both the standard of living and the growth of real GDP per person vary widely across countries.
a.
True
b.
False
4. According to some estimates, over the last two decades China has had an annual average growth rate of about 12
percent.
a.
True
b.
False
5. In some countries in Sub-Saharan Africa real GDP per person has been stagnant for many years.
a.
True
b.
False
6. International data on real GDP per person gives us a sense of how standards of living vary across countries.
a.
True
b.
False
7. In 2014 income per person in the United States was about 10 times that in India.
a.
True
b.
False
8. In the United States in 2014 real GDP per person was about $56,000, while in some poor countries real GDP per person
was less than $5,000.
a.
True
b.
False
9. Over the period 1870-2014, the United States experienced an average annual growth rate of real GDP per person of
about 1.8 percent per year.
a.
True
b.
False
10. Although growth rates across countries vary some, rankings of countries by income remain pretty much the same over
time.
a.
True
b.
False
11. Over the last 140 years or so, on average Canada’s real GDP per-person grew faster than that of the U.K.
a.
True
b.
False
12. Since 1870 Canadian and U.S real GDP per person grew from below to above that in the United Kingdom. The
explanation for this is likely that productivity grew faster in Canada and the U.S. than in the United Kingdom.
a.
True
b.
False
13. Over the period 1890-2014, Japan experienced a 2.59 percent average annual growth rate of real GDP per person.
a.
True
b.
False
14. Over the period 1900-2014, Brazil’s rate of economic growth exceeded that of China.
a.
True
b.
False
15. If it could increase its growth rates slightly, a country with low income would catch up with rich countries in about ten
years.
a.
True
b.
False
16. If a country has a higher level of productivity than another, then it also has a higher level of real GDP.
a.
True
b.
False
17. International data on the history of real GDP growth rates shows that over the last 120 years or so, rich countries got
richer and poor countries got poorer.
a.
True
b.
False
18. Productivity can be computed as the number of hours worked divided by output.
a.
True
b.
False
19. Journey Motorcycles produced 100 motorcycles using 50 workers who each worked 8 hours a day. Journey’s
productivity was 1/4.
a.
True
b.
False
20. If Country A produces 7,000 units of goods and services using 700 hours of labor, and if Country B produces 5,500
units of goods and services using 500 units of labor, then productivity is lower in Country A than in Country B.
a.
True
b.
False
21. Indonesians, for example, have a lower standard of living than Americans because they have a lower level of
productivity.
a.
True
b.
False
22. Like physical capital, human capital is a produced factor of production.
a.
True
b.
False
23. Human capital is the term economists use to refer to the knowledge and skills that workers acquire through education,
training, and experience.
a.
True
b.
False
24. Increases in both human capital per worker and physical capital per worker increase productivity.
a.
True
b.
False
25. A forest is an example of a nonrenewable resource.
a.
True
b.
False
26. Petroleum is an example of a nonrenewable resource.
a.
True
b.
False
27. Historical trends in the prices of most natural resources compared to prices of other goods indicate that most natural
resources have become scarcer over time.
a.
True
b.
False
28. It is possible for a country without a lot of domestic natural resources to have a high standard of living.
a.
True
b.
False
29. Constant returns to scale is the point on a production function where increasing inputs will no longer increase output.
a.
True
b.
False
30. If a production function has constant returns to scale, then if all inputs double so does production.
a.
True
b.
False
31. As capital per worker rises, output per worker rises. However, this increase in output per worker is smaller at smaller
levels of existing capital per worker.
a.
True
b.
False
32. The same size decrease in the amount of capital stock per worker will cause output per worker to fall by more in a
country with a relatively high level of capital per worker than in a country with a relatively low level of capital per
worker.
a.
True
b.
False
33. An increase in the saving rate permanently increases the growth rate of real GDP per person.
a.
True
b.
False
34. An increase in a country’s saving rate permanently raises its productivity.
a.
True
b.
False
35. Other things the same, another unit of capital will increase output by more in a poor country than in a rich country.
a.
True
b.
False
36. The catch-up effect refers to the idea that poor countries, despite their best efforts, are not likely ever to experience the
economic growth rates of wealthier countries.
a.
True
b.
False
37. Two countries with the same saving rates must have the same growth rate of real GDP per person.
a.
True
b.
False
38. Assuming constant returns to scale, if two countries are otherwise the same, the one that is poorer grows faster.
a.
True
b.
False
39. Studies confirm that controlling for other variables such as the percentage of GDP devoted to investment, poor
countries tend to grow at a faster rate than rich countries.
a.
True
b.
False
40. When Americans invest in Russia, the income of Russians (that is, Russian GNP) rises by more than production in
Russia (that is, Russian GDP).
a.
True
b.
False
41. If your company opens and operates a branch in a foreign country, your company engages in foreign direct
investment.
a.
True
b.
False
42. Other things the same, domestic investment will increase a country’s real GDP by more than foreign investment.
a.
True
b.
False
43. Foreign direct investment and domestic investment have the same effect on all measures of economic prosperity.
a.
True
b.
False
44. An increase in capital increases productivity only if it is purchased and operated by domestic residents.
a.
True
b.
False
45. Investment in human capital has opportunity costs, but investment in physical capital does not.
a.
True
b.
False
46. Other things the same, an economy’s factors of production are likely to be used more effectively if there is an
economywide respect for property rights.
a.
True
b.
False
47. A country that made its courts less corrupt and its government more stable would likely see its standard of living rise.
a.
True
b.
False
48. If a country made it easier for people to establish and prove the ownership of their property, real GDP per person
would likely rise.
a.
True
b.
False
49. Economists generally believe that inward-oriented policies are more likely to foster growth than outward-oriented
policies.
a.
True
b.
False
50. Economists generally believe that policies such as reducing barriers to trade are likely to foster economic growth.
a.
True
b.
False
51. If a rich country reduced subsidies to domestic producers of goods that poor countries have a comparative advantage
producing, the standard of living in these poor countries would likely rise.
a.
True
b.
False
52. One reason that governments may find it useful to sponsor universities and basic research is that to a large extent
knowledge is generally a private good.
a.
True
b.
False
53. The population growth rate tends to be higher in developed countries than in developing countries.
a.
True
b.
False
54. In countries where women are discriminated against, policies that increase the likelihood of career success and
educational opportunities for women are likely to decrease the birth rate.
a.
True
b.
False
55. Countries with high population growth rates tend to have lower levels of educational attainment.
a.
True
b.
False
56. Economist Michael Kremer found that world growth rates fell as population increased.
a.
True
b.
False
57. A country’s standard of living depends on its ability to produce goods and services.
a.
True
b.
False
58. Economists generally agree on the role the government should play in promoting productivity and economic growth.
a.
True
b.
False
59. Randomized control trials can help economists evaluate the impact of global aid programs in the same way that
doctors test drugs.
a.
True
b.
False
60. Income rises after a charity gives poor families free livestock. The harvest that year was also particularly bountiful.
The charity should take full credit for the observed increase in the standard of living.
a.
True
b.
False
61. The majority of economists believe that future innovations will not be transformational enough to sustain high
economic growth rates in the U.S. and western Europe.
a.
True
b.
False
62. Without controlling for differences in natural resources and technological knowledge, diminishing returns can explain
the entire difference in economic growth rates for China and the United States.
a.
True
b.
False
