45. What is the growth in resources when total factor productivity grows by 3.5 percent and the economy grows by 2.7
percent?
a.
0.8%
b.
-2.7%
c.
3.5%
d.
-0.8%
e.
0.6%
46. Suppose that an economy grows by 4 percent, total factor productivity grows by 3 percent, and the labor force
increases by 6 percent. If labor and capital are the only inputs and labor contributes 40 percent to GDP, then the stock of
capital must have _____.
a.
fallen by 5%
b.
fallen by 3.33%
c.
fallen by 2.33%
d.
risen by 3%
e.
risen by 1.8%
Challenging
MACR.BOYE.16.85 – ch. 16, 3
United States – Reflective Thinking
Productivity
Application
Revised
47. Suppose an economy grows by 2.5 percent, the labor force rises by 3 percent, and capital rises by 1 percent. If capital
takes 50 percent of real GDP and labor takes the other 50 percent of real GDP, then the growth in total factor productivity
must be _____.
a.
6.5%
b.
4.5%
c.
0.5%
d.
6%
e.
10%
Moderate
MACR.BOYE.16.85 – ch. 16, 3
United States – Reflective Thinking
Productivity
Application
d
Moderate
MACR.BOYE.16.85 – ch. 16, 3
Productivity
Application
48. Economic growth is equal to:
a.
total factor productivity plus amounts of resources.
b.
growth in total factor productivity plus growth in amounts of resources.
c.
total factor productivity minus marginal factor productivity.
d.
real GDP plus national output.
e.
GNP plus GDP.
b
Easy
MACR.BOYE.16.85 – ch. 16, 3
United States – Measuring the Economy
Productivity
Knowledge
49. Suppose in an economy the total factor productivity grows by 5%. Annual growth in labor and capital stock equal
2.5% and 1.5% respectively. If the labor force receives 75% of the real GDP, calculate the annual growth in the real GDP
of the economy.
a.
b.
c.
d.
e.
Moderate
MACR.BOYE.16.85 – ch. 16, 3
Productivity
Application
50. By the late 1990s, the growth rate of total factor productivity in the United States _____.
a.
averaged about 1%
b.
averaged between 3 and 4%
c.
averaged between 6 and 8%
d.
averaged between 10 and 15%
e.
averaged above 20%
Moderate
MACR.BOYE.16.85 – ch. 16, 3
United States – Measuring the Economy
Productivity
Knowledge
51. Which of the following factors will increase labor productivity in the United States?
Revised
a.
An aging labor force
b.
A decline in the number of women entering the workforce
c.
An increase in unskilled workers
d.
An increase in the average level of education
e.
A decrease in the number of educated immigrants
52. Labor productivity is measured as:
a.
the share of wages in national income.
b.
the change in labor to capital ratio.
c.
real output per labor hour.
d.
the change in output from hiring an additional unit of labor.
e.
the growth in the quantity of labor.
MACR.BOYE.16.86 – ch. 16, 4
53. As more women entered the labor force in the 1980s in the United States:
a.
the number of unskilled workers increased.
b.
the average quality of the labor force improved.
c.
the quantity of output decreased.
d.
the supply of skilled labor exceeded its demand.
e.
labor productivity increased.
MACR.BOYE.16.86 – ch. 16, 4
United States – Measuring the Economy
54. Which of the following contributed to a slowdown in U.S. labor productivity during the 1970s?
a.
An increase in the number of skilled legal immigrant workers
b.
An increase in the illegal employment of minors
c.
An increase in the number of skilled illegal immigrant workers
d.
The exit of the baby boom generation from the work force
MACR.BOYE.16.86 – ch. 16, 4
United States – Measuring the Economy
e.
Lower energy prices
55. Labor productivity is affected by each of the following, except:
a.
technological innovation.
b.
change in capital stock.
c.
change in average age of the workers.
d.
change in educational levels.
e.
cultural background and ethnicity.
MACR.BOYE.16.86 – ch. 16, 4
United States – Measuring the Economy
56. Which of the following stands true for technological innovation?
a.
Actual changes in technology proceed as evenly as expenditures on research and development.
b.
A decline in spending on research and development may indicate less of a commitment to increasing
productivity.
c.
The purchase of computer hardware or software as investment is not advised because of continuous
innovations in the field of IT.
d.
In developing countries, the benefits of IT innovations are being fully exploited because of a large population.
e.
Education gives developing countries a substantial advantage over industrial countries in creating and
implementing innovations because of a large percentage of skilled labor force in the population.
MACR.BOYE.16.86 – ch. 16, 4
United States – Measuring the Economy
57. If natural gas is replaced by solar power as a more efficient form of energy, we should expect _____.
a.
a leftward shift of the aggregate supply curve
b.
higher production prices at every output level
c.
a decline in the growth of total output
d.
a decrease in the stock of energy-efficient capital goods
e.
an increase in total factor productivity
MACR.BOYE.16.86 – ch. 16, 4
United States – Analytic – BB-Legal
United States – Measuring the Economy
58. As the service sector in the U.S. economy grows, traditional productivity measures will become:
a.
biased downward, because the qualitative aspects of a service tend to be understated.
b.
biased upward, because quantitative improvements in the service sector tend to be overstated.
c.
biased upward, because prices in the service sector always rise faster than prices in manufacturing.
d.
biased downward, because service output leads to a long-run decline in the inflation rate.
e.
completely inappropriate for measuring even manufacturing output.
MACR.BOYE.16.86 – ch. 16, 4
United States – Reflective Thinking
59. Productivity in the services industry may be underestimated because ____ may not be taken into account.
a.
the labor costs of providing a service
b.
the quantity of the service produced
c.
the capital costs of providing a service
d.
the prices charged by service industries
e.
the quality of the service provided
MACR.BOYE.16.86 – ch. 16, 4
60. Increases in the prices of services due to improvement in its quality indicate a(n) _____.
a.
decline in productivity.
b.
decline in real GDP.
c.
increase in output.
d.
decline in manufacturing output.
e.
increase in technological progress.
MACR.BOYE.16.86 – ch. 16, 4
MACR.BOYE.16.86 – ch. 16, 4
61. Which of the following stands true for factors that affect changes in productivity across countries and over time?
a.
It is more difficult to measure changes in the quality of goods than changes in the quality of services.
b.
As energy prices go up, energy-efficient capital goods become obsolete.
c.
It is believed that productivity grows more slowly in manufacturing industries than in services, because of the
less labor-intensive nature of manufacturing industries.
d.
The key to efficient production is the allocation of resources to their best use.
e.
The greater the productivity, the more efficient the allocation of resources, and the less developed a country’s
financial market would be.
d
Moderate
United States – Analytic – BB-Legal
United States – Measuring the Economy
Productivity
Knowledge
62. It is believed that the relatively high rate of labor force growth in the developing countries does not translate into a
high rate of economic growth because:
a.
workers in developing countries have excess capital.
b.
workers in developing countries are not motivated enough.
c.
workers in developing countries do not have the natural resources needed for production.
d.
workers in developing countries have very little capital.
e.
the high birth rate is more than offset by an enormous mortality rate.
d
Easy
MACR.BOYE.16.86 – ch. 16, 4
United States – Analytic – BB-Legal
United States – Measuring the Economy
Productivity
Knowledge
63. Economic growth in any country is reflected by an increase in real GDP.
a.
True
b.
False
True
Easy
MACR.BOYE.16.83 – ch. 16, 1
United States – Analytic – BB-Legal
Defining Economic Growth
Knowledge
64. If real GDP in Sweden was SEK 822 billion at the end of 1993 and SEK 950 billion at the end of 1994, we can say
that the Swedish economy grew at an annual rate of 7% in 1994.
Productivity
Knowledge
a.
True
b.
False
65. According to the rule of 72, if you have $15,000 in an account that grows at the rate of 12 percent annually, it will take
approximately six years for the $15,000 to double to $30,000.
a.
True
b.
False
True
Moderate
MACR.BOYE.16.83 – ch. 16, 1
Defining Economic Growth
Application
66. The rule of 72 is a formulation that allows us to know, in a very quick and simple manner, the approximate time it
takes to double a number that grows at a constant rate.
a.
True
b.
False
True
Moderate
MACR.BOYE.16.83 – ch. 16, 1
United States – Measuring the Economy
Defining Economic Growth
Knowledge
67. Based on the rule of 72, it would require 18 years for an economy to double its real output if the annual growth rate
was 4%.
a.
True
b.
False
True
Moderate
MACR.BOYE.16.83 – ch. 16, 1
United States – Reflective Thinking
Defining Economic Growth
Application
68. When you are calculating how long it will take your initial bank deposit to double, the rule of 72 prescribes that you
False
Moderate
MACR.BOYE.16.83 – ch. 16, 1
United States – Reflective Thinking
Defining Economic Growth
Application
divide the annual interest rate paid on the deposit by 72.
a.
True
b.
False
69. Per capita real GDP is obtained by dividing real GDP by the number of people active in the labor force.
a.
True
b.
False
False
Easy
MACR.BOYE.16.83 – ch. 16, 1
Defining Economic Growth
Knowledge
70. If the per capita real GDP in a country grows, it definitely implies that the average citizen of that country is better off.
a.
True
b.
False
False
Easy
United States – Analytic – BB-Legal
United States – Measuring the Economy
Knowledge
71. When trying to determine the standard of living in a given country, it is not important to observe its income
distribution, because what we are interested in is the income per person in the economy.
a.
True
b.
False
False
Easy
MACR.BOYE.16.83 – ch. 16, 1
Knowledge
72. Economic growth measured in terms of an increase in per capita real GDP is not a good measure of the distribution of
income in a nation.
False
Moderate
MACR.BOYE.16.83 – ch. 16, 1
Defining Economic Growth
Knowledge
a.
True
b.
False
73. Per capita real GDP does not give us information about the distribution of income in a country or about the
nonmonetary quality of life.
a.
True
b.
False
True
Easy
MACR.BOYE.16.83 – ch. 16, 1
Defining Economic Growth
Knowledge
74. Since the definition of economic growth does not take into account the growth of the country’s population, the income
of the average person in a country with high real GDP growth could be declining through time.
a.
True
b.
False
True
Challenging
MACR.BOYE.16.84 – ch. 16, 2
United States – Reflective Thinking
Defining Economic Growth
Comprehension
75. We can say that the potential level of real GDP is fixed because the long-run aggregate supply curve is a vertical line.
a.
True
b.
False
False
Easy
MACR.BOYE.16.84 – ch. 16, 2
The Determinants of Growth
Knowledge
76. Consumer spending is considered a determinant of economic growth.
a.
True
True
Easy
MACR.BOYE.16.83 – ch. 16, 1
United States – Measuring the Economy
Defining Economic Growth
Knowledge
b.
False
77. The long-run growth of an economy depends on productive resources (land, labor, and capital) and on technological
advances.
a.
True
b.
False
Moderate
MACR.BOYE.16.84 – ch. 16, 2
United States – Measuring the Economy
The Determinants of Growth
Knowledge
Revised
78. Other things equal, a country’s long-run aggregate supply will shift to the right when the productivity of labor rises.
a.
True
b.
False
True
Moderate
MACR.BOYE.16.84 – ch. 16, 2
United States – Analytic – BB-Legal
United States – Measuring the Economy
The Determinants of Growth
Knowledge
79. As all available statistics show us, because the average annual population growth is 1.4 percent higher in developing
countries than in industrial nations, economic growth is lower in low-income countries.
a.
True
b.
False
False
Moderate
MACR.BOYE.16.84 – ch. 16, 2
The Determinants of Growth
Comprehension
80. The labor force typically grows faster in developing countries than in industrial ones because mortality rates are higher
in low-income countries.
False
Moderate
MACR.BOYE.16.84 – ch. 16, 2
The Determinants of Growth
Knowledge
a.
True
b.
False
81. Poor countries grow faster than rich countries because of rapid growth in the labor force.
a.
True
b.
False
False
Easy
MACR.BOYE.16.84 – ch. 16, 2
United States – Measuring the Economy
The Determinants of Growth
Knowledge
82. A lack of current saving can be offset by borrowing, but the availability of borrowing is limited by the prospects for
future saving.
a.
True
b.
False
True
Moderate
MACR.BOYE.16.84 – ch. 16, 2
United States – Measuring the Economy
The Determinants of Growth
Knowledge
83. A country with a low living standard can save easily.
a.
True
b.
False
False
Easy
MACR.BOYE.16.84 – ch. 16, 2
United States – Measuring the Economy
The Determinants of Growth
Knowledge
84. Abundance of natural resources is a necessary but not sufficient condition for economic growth.
a.
True
b.
False
False
Moderate
MACR.BOYE.16.84 – ch. 16, 2
United States – Measuring the Economy
The Determinants of Growth
Knowledge
85. Other things equal, advances in technology make resources more productive.
a.
True
b.
False
True
Easy
United States – Measuring the Economy
Knowledge
86. In economics, the term technology refers to different ways of combining resources to produce output. In this sense,
technological advances make possible the production of more output from a given amount of resources.
a.
True
b.
False
True
MACR.BOYE.16.84 – ch. 16, 2
United States – Measuring the Economy
Knowledge
87. Other things equal, if the labor input grows faster than total output, total factor productivity falls.
a.
True
b.
False
True
United States – Reflective Thinking
Productivity
Comprehension
88. If the growth rate of resources is 2 percent and per capita real output is growing at 4 percent, then total factor
productivity has fallen by 4 percent.
a.
True
b.
False
False
False
Easy
MACR.BOYE.16.84 – ch. 16, 2
United States – Measuring the Economy
Knowledge
89. Assume that the economy grows by 3 percent, total factor productivity grows by 2 percent, and the labor force grows
at 2 percent. If labor contributes 40 percent to real GDP, then the stock of capital must have risen by 0.33 percent.
a.
True
b.
False
True
Challenging
United States – Reflective Thinking
Productivity
Application
90. The total U.S. productivity growth rate decreased during the 1990s due to massive technological innovations.
a.
True
b.
False
False
Easy
Productivity
Knowledge
91. Because fewer people are now needed to perform an average job, it is said that the information technology revolution
has played an important role in slowing down productivity in the United States.
a.
True
b.
False
False
Moderate
MACR.BOYE.16.86 – ch. 16, 4
United States – Measuring the Economy
Productivity
Knowledge
92. Contrary to popular belief, U.S. productivity growth did not actually improve in the mid 1990s despite the massive
growth in technological innovation.
a.
True
b.
False
False
Moderate
MACR.BOYE.16.85 – ch. 16, 3
Productivity
Application
93. U.S. labor productivity had slowed down in the 1970s and 1980s, but recent data shows that labor productivity has
once again increased in the country.
a.
True
b.
False
True
Moderate
United States – Measuring the Economy
Productivity
Knowledge
94. Productivity in the services industry may be underestimated because measurements of productivity do not take into
account the quality of the service provided.
a.
True
b.
False
True
Easy
MACR.BOYE.16.86 – ch. 16, 4
United States – Measuring the Economy
Productivity
Knowledge
95. The development of a financial market is not important in determining the economic growth of a nation.
a.
True
b.
False
False
Easy
United States – Measuring the Economy
Productivity
Knowledge
Challenging
Productivity
Comprehension