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Production and Growth 6211
104.
If a newly elected government takes actions that makes its country’s courts more efficient and
less corrupt, then
a.
producers will have greater confidence that they will benefit from their efforts.
b.
producers are likely to be more specialized.
c.
buyers and sellers will be more likely to honor contracts.
d.
All of the above are correct.
105.
Inward-oriented policies
a.
include imposing tariffs and other trade restrictions.
b.
have generally increased productivity and growth in the countries that pursued them.
c.
promote the production of goods and services that the country produces most efficiently.
d.
All of the above are correct.
106.
Inward-oriented policies
a.
are generally supported by economists.
b.
are primarily concerned with the development of human capital.
c.
in some ways are like prohibiting the use of certain technologies.
d.
All of the above are correct.
107.
Which of the following will increase a country’s real GDP per person?
a.
imposing restrictions on foreign trade and foreign investment
b.
imposing restrictions on foreign trade and reducing restrictions on foreign investment
c.
reducing restrictions on foreign trade and imposing restrictions on foreign investment
d.
reducing restrictions on foreign trade and foreign investment
108.
An increase in capital will increase real GDP per person
a.
more in a poor country than a rich country. The increase in real GDP per person will be larger
if the addition
to capital is from domestic rather than foreign investment.
b.
more in a poor country than a rich country. The increase in real GDP per person will be the
same whether
the addition to capital is from domestic or foreign investment.
c.
less in a poor country than a rich country. The increase in real GDP per person will be larger
if the addition
to capital is from domestic rather than foreign investment.
d.
less in a poor country than a rich country. The increase in real GDP per person will be the
same whether the
addition to capital is from domestic or foreign investment.
109.
An increase in capital will increase real GNP per person
a.
more in a poor country than a rich country. The increase in real GNP per person will be larger
if the addition
to capital is from domestic rather than foreign investment.
b.
more in a poor country than a rich country. The increase in real GNP per person will be larger
if the addition
to capital is foreign rather than from domestic investment.
c.
less in a poor country than a rich country. The increase in real GNP per person will be larger
if the addition
to capital is from domestic rather than foreign investment.
d.
less in a poor country than a rich country. The increase in real GNP per person will be larger
if the addition
to capital is foreign rather than from domestic investment.
110.
Countries that pursued outward-oriented policies in the 20th century
a.
experienced lower rates of economic growth than did countries that pursued inward-oriented
policies.
b.
experienced higher levels of political instability than did countries that pursued inward-oriented
policies.
c.
include Singapore, South Korea, and Taiwan.
d.
All of the above are correct.
111.
Countries with more than 80 percent of their population living within 100 kilometers of a coast
will have an average
GDP per person that is
a.
around four times a country with less than 20 percent of the population living near the coast.
b.
around ten times a country with less than 20 percent of the population living near the coast.
c.
around twenty times a country with less than 20 percent of the population living near the
coast.
d.
around fifty times a country with less than 20 percent of the population living near the coast.
112.
The president of Suldinia, a developing country, proposes that his country needs to help domestic
firms by reducing
trade restrictions.
a.
These are outward-oriented policies and most economists believe they would have beneficial
effects on
growth in Suldinia.
b.
These are outward-oriented policies and most economists believe they would have adverse
effects on
growth in Suldinia.
c.
These are inward-oriented policies and most economists believe they would have beneficial
effects on
growth in Suldinia.
d.
These are inward-oriented policies and most economists believe they would have adverse
effects on growth
in Suldinia.
113.
In the past there have been violent protests against the World Bank and the World Trade
Organization. The
protesters argued that these institutions promote free trade and also encourage
corporations in rich countries to
invest in poor countries. The protesters contended that these
practices make rich countries richer and poor
countries poorer. An economist would
a.
disagree with the protesters because these practices will help make both rich and poor
countries richer.
b.
disagree with the protesters about free trade, but would agree with the protesters about
corporate
investment.
c.
disagree with the protesters about corporate investment, but would agree with the protesters
about free
trade.
d.
agree with the protesters.
114.
Outward-oriented policies
a.
allow countries to take advantage of gains from trade.
b.
have generally led to high growth for the countries that pursued them.
c.
receive widespread support from economists.
d.
All of the above are correct.
115.
When a country removes trade barriers and imports appliances and exports engineering services,
a.
its growth slows.
b.
its productivity decreases.
c.
it is essentially transforming engineering services into appliances.
d.
its economic well-being decreases while that of the country that sells appliances increases.
116.
Suppose a country increases trade restrictions. This country would be pursing an
a.
inward policy, which most economists believe has beneficial effects on the economy.
b.
inward policy, which most economists believe has adverse effects on the economy.
c.
outward policy, which most economists believe has beneficial effects on the economy.
d.
outward policy, which most economists believe has adverse effects on the economy.
117.
A country with a relatively low level of real GDP per person is considering adopting two policies
to promote
economic growth. The first is to decrease barriers to trade. The second is to restrict
foreign portfolio investment.
Which of these policies do most economists say promote growth?
a.
both the first and the second
b.
the first but not the second
c.
the second but not the first
d.
neither the first nor the second
118.
National defense and knowledge are generally considered to be
a.
private goods.
b.
public goods.
c.
proprietary goods.
d.
societal goods.
119.
Patents turn new ideas into
a.
public goods, and increase the incentive to engage in research.
b.
public goods, but decrease the incentive to engage in research.
c.
private goods, and increase the incentive to engage in research.
d.
private goods, but decrease the incentive to engage in research.
120.
Inventors often obtain patents on new products and processes, thereby turning new ideas into
a.
private goods and increasing the incentive to engage in research.
b.
private goods but decreasing the incentive to engage in research.
c.
public goods and increasing the incentive to engage in research.
d.
public goods but decreasing the incentive to engage in research.
121.
Electronics firms may be able to get patents on their ideas. Doing so makes their ideas
a.
private goods rather than public goods. This gives people more incentive to engage in
research.
b.
private goods rather than public goods. This gives people less incentive to engage in research.
c.
public goods rather than private goods. This gives people more incentive to engage in
research.
d.
public goods rather than private goods. This gives people more incentive to engage in private
research.
122.
Once an idea enters society's pool of knowledge, the idea becomes a
a.
societal good.
b.
private good.
c.
public good.
d.
proprietary good.
123.
In medieval Europe an important technological advance was the use of the padded horse collar
for plowing. Once
this idea was thought of, other people used it. This illustrates that knowledge
is generally a
a.
public good.
b.
societal good.
c.
private good.
d.
normal good.
124.
In the 19th century John Deere took out a patent on a newly designed plow that incorporated
steel to make plowing
faster. Many farmers bought plows from his company and he made
millions. This example shows that patents turn
an idea into a
a.
public good.
b.
societal good.
c.
private good.
d.
normal good.
125.
A rapid increase in the number of workers, other things the same, is likely in the short term to
a.
raise real GDP per person, but decrease real GDP.
b.
decrease both real GDP and real GDP per person.
c.
raise both real GDP and real GDP per person.
d.
raise real GDP, but decrease real GDP per person.
126.
If the best educated and most skilled persons leave a country, then in the short term this
country’s human capital per worker
a.
and physical capital per worker will increase.
b.
and physical capital per worker will decrease.
c.
will increase but physical capital per worker will decrease.
d.
will decrease but physical capital per worker will increase.
127.
Because of its effect on the amount of capital per worker, in the short term an increase in the
working population is
likely to
a.
raise productivity. Other things the same, this increase will be larger in a poor country.
b.
raise productivity. Other things the same, this increase will be larger in a rich country.
c.
reduce productivity. Other things the same, this decrease will be larger in a poor country.
d.
reduce productivity. Other things the same, this decrease will be larger in a rich country.
128.
Other things the same, an increase in population growth
a.
increases capital per worker. Further, there is some evidence that a higher population growth
rate may
increase the pace of technological progress.
b.
increases capital per worker. However, there is some evidence that a higher population
growth rate may
decrease the pace of technological progress.
c.
decreases capital per worker. Further, there is some evidence that a higher population growth
rate may
decrease the pace of technological progress.
d.
decreases capital per worker. However, there is some evidence that a higher population
growth rate may
increase the pace of technological progress.
129.
If over a short time there is an increase in the number of people retired and a decrease in the
number of people
working, then productivity
a.
and real GDP per person rise.
b.
rises but real GDP per person falls.
c.
falls and real GDP per person rises.
d.
and real GDP per person fall.
130.
If over a short time a large number of teenagers become old enough to find employment and a
much smaller
number of people retire, then productivity
a.
and real GDP per person rise.
b.
rises but real GDP per person falls.
c.
falls but real GDP per person rises.
d.
and real GDP per person fall.
131.
In the fourteenth century it is estimated that deaths resulting from the bubonic plague reduced the
population by
about a third. Assuming diminishing returns, the decrease in population should have
a.
increased productivity and real GDP per person.
b.
increased productivity but decreased real GDP per person.
c.
increased real GDP per person, but decreased productivity.
d.
decreased productivity and real GDP per person.
132.
Which of the following is not correct?
a.
China allows only one child per family and couples that violate this rule are subject to
substantial fines.
b.
In developed countries, population growth is consistently about 3 percent per year; in
developing countries it
is consistently about 5 percent per year.
c.
Educational attainment tends to be lowest in countries with the highest population growth.
d.
Economists generally believe that a country that decreases a high population growth rate can
increase its
economic growth rate.
133.
Which of the following countries achieved higher economic growth, in part by mandating a
reduction in population
growth?
a.
Great Britain
b.
China
c.
Australia
d.
France
134.
Malthus predicted that the power of population
a.
was greater than the power of the earth to produce subsistence. His forecast was on the
mark.
b.
was greater than the power of the earth to produce subsistence. His forecast was off the
mark.
c.
was less than the power of the earth to produce subsistence. His forecast was on the mark.
d.
was less than the power of the earth to produce subsistence. His forecast was off the mark.
135.
Rapid population growth
a.
was hailed by Thomas Robert Malthus as the key to future economic growth.
b.
tends to lead to higher levels of educational attainment.
c.
is the main reason that less developed nations are poor.
d.
may depress economic prosperity by reducing the amount of capital which each worker has to
work with.
136.
Thomas Malthus’s predictions turned out to be wrong due to
a.
technological advances such as those during the Industrial Revolution.
b.
smaller populations now than in the time of Malthus.
c.
the effects of brain-drain.
d.
unlimited natural resources.
137.
Which of the following is an observation made by economist Michael Kremer?
a.
World growth rates increased as the population increased.
b.
Technological progress allows for increasing population because of advances in agriculture.
c.
World population is growing so rapidly that soon it will outstrip natural resources and our
standard of living
will decline.
d.
All of the above are observations made by Kremer.
138.
Which of the following is correct?
a.
If developing countries limit career and educational opportunities for women, birth rates are
likely to be
lower.
b.
Growth rates in developed and developing countries are nearly the same.
c.
Historically, in periods where the rate of population growth was high, so was the rate of
growth in world real
GDP per person.
d.
None of the above is correct.
139.
Which of the following is true?
a.
Kremer argued that with greater population, society would generate more ideas so that
growth of real GDP
per person could continue. Malthus argued that increasing population
would outstrip agricultural production.
b.
Kremer argued that increases in population would reduce the amount of human and physical
capital per
worker so that eventually the standard of living would decline. Malthus argued that
increases in technology
would allow increased output growth so that even with population
growth, society would enjoy a higher
standard of living.
c.
Malthus argued that with greater population, society would generate more ideas so that growth
of real GDP
per person could continue. Kremer argued that increasing population would
outstrip agricultural production.
d.
Malthus argued that increases in population would reduce the amount of human and physical
capital per
worker so that eventually the standard of living would decline. Kremer argued that
increases in technology
would allow increased output growth so that even with population
growth, society would enjoy a higher
standard of living.
140.
An increase in a country’s population may contribute to the rate of technological progress
because a larger population
a.
forces the capital stock to be spread more thinly.
b.
forces natural resources to be spread more thinly.
c.
brings with it more scientists, inventors, and engineers.
d.
brings with it more favorable recognition from other countries.
141.
Over extended periods of time, population growth
a.
has no effect on the standard of living.
b.
has uncertain effects on the standard of living.
c.
clearly raises the standard of living.
d.
clearly lowers the standard of living.
142.
Other things the same, higher population growth
a.
raises the amount of physical capital per worker and there is some evidence that it raises the
pace of
technological progress.
b.
raises the amount of physical capital per worker, but there is some evidence that it reduces
the pace of
technological progress.
c.
reduces the amount of physical capital per worker, but there is some evidence that it raises
the pace of
technological progress.
d.
reduces the amount of physical capital per worker and there is some evidence that it reduces
the pace of
technological progress.
143.
On the basis of theory and empirical evidence, economists have reached several conclusions
about economic
growth. Which of the following is not one of these conclusions?
a.
A relatively simple way to increase growth rates permanently is to increase a country's saving
rate.
b.
Growth is generally inhibited rather than promoted by policies like protective tariffs.
c.
Well-established property rights that are enforced by fair and efficient courts are important to
economic
growth.
d.
Countries with few domestic natural resources still have opportunities for economic growth.
144.
Which of the following provide benefits to society at large and not just to the person(s) who
pursues it?
a.
both technological knowledge that is a public good and education
b.
technological knowledge that is a public good, but not education
c.
education, but not technological knowledge that is a public good
d.
neither education, nor technological knowledge that is a public good
145.
All else equal, which of the following would tend to cause real GDP per person to rise?
a.
a change from outward-oriented policies to inward-oriented policies
b.
an increase in investment in human capital
c.
a weakening of property rights
d.
All of the above are correct.
146.
All else equal, which of the following would tend to cause real GDP per person to rise?
a.
a change from inward-oriented policies to outward-oriented policies
b.
an increase in investment in human capital
c.
strengthening of property rights.
d.
All of the above are correct.
147.
Which of the following statements is not correct?
a.
The catch-up effect is based on the assumption of diminishing returns to capital.
b.
Investment in poor countries by citizens of rich countries is one way poor countries can learn
new
technologies.
c.
Malthus argued that charity and government aid was an effective way to reduce poverty.
d.
Peace and justice are keys to growth.
148.
Senator Smith says that in order to help poor countries develop, the United States should: 1.
Prevent U.S.
corporations from investing in poor countries because they take profits that the poor
countries should have; 2. Not
import goods from poor countries that use child labor; 3. Work to
promote political stability in poor countries; and 4.
Reduce poor countries’ reliance on market
forces in their economies. How many of these ideas are likely to help
poor countries grow?
a.
1
b.
2
c.
3
d.
4
149.
Senator Noitall says that in order to help poor countries develop, the United States should: 1.
Encourage poor
countries to allow U.S. and other foreign firms to build and operate businesses
in their country; 2. Reduce or
eliminate subsidizes to U.S. producers when poor countries have a
comparative advantage producing those goods
the U.S. subsidizes; 3. Work to promote political
stability in poor countries; and 4. Reduce poor countries reliance
on market forces in their
economies. How many of these ideas are likely to help poor countries grow?
a.
1
b.
2
c.
3
d.
4
