True / False
1. College tuition costs have risen faster than prices in general from 1979 to 2009.
a.
True
b.
False
True
Easy
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Three Pillars Of Productivity Growth
2. Service sector outputs could be expected to increase in price less than industrial sector outputs as an economy grows.
a.
True
b.
False
False
Moderate
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Three Pillars Of Productivity Growth
3. For a given technology, a higher capital stock will decrease labor productivity.
a.
True
b.
False
False
Moderate
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Three Pillars Of Productivity Growth
4. Labor productivity rises as the amount of capital available to workers increases.
a.
True
b.
False
True
DISC: Productivity and growth
United States – BPROG: Analytic
5. The production function shifts upward as the capital stock increases.
a.
True
b.
False
True
Moderate
6. Improvements in the level of technology will generally shift the production function downward.
a.
True
b.
False
False
Moderate
7. A superior level of technology is an important reason the productivity of workers in rich countries is high.
a.
True
b.
False
True
Easy
8. Human capital includes the tools and equipment that human beings work with.
a.
True
b.
False
False
Moderate
9. All increases in the level of human capital take place in schools.
a.
True
b.
False
False
Moderate
10. Productivity levels are higher in rich countries compared to poor countries.
a.
True
b.
False
True
Easy
11. Productivity growth rates are usually higher in rich countries than in poor countries.
a.
True
b.
False
False
Moderate
12. The convergence hypothesis suggests that poor countries may close the income gap with rich countries.
a.
True
b.
False
True
Moderate
13. Imitation is not only the highest form of flattery but also an easier way for poorer countries to develop new
technology.
a.
True
b.
False
True
Moderate
14. The poorest countries in Africa have some of the highest growth rates, thus proving the convergence hypothesis.
a.
True
b.
False
False
Moderate
15. A nation’s capital consists mainly of stocks, bonds, and other financial assets.
a.
True
b.
False
False
Moderate
16. The term “capital formation” actually implies adding new equipment to a nation’s factories.
a.
True
b.
False
True
Moderate
17. As the level of real interest rates rise, the amount of new investment will rise also.
a.
True
b.
False
False
Moderate
18. Capital investment becomes more profitable for a business firm as the real interest rate decreases.
a.
True
b.
False
True
Difficult
19. When the economy devotes more of its resources to investment goods, it must devote fewer resources to consumer
goods.
a.
True
b.
False
True
Easy
20. Some politicians argue that reducing the corporate income tax will increase business investment spending.
a.
True
b.
False
True
Easy
21. By enjoying more consumer goods today, the economy spurs growth in future consumer goods.
a.
True
b.
False
False
Moderate
22. In 2010 President Obama proposed more generous tax write-offs for businesses that invest in additional equipment in
order to stimulate investment spending.
a.
True
b.
False
True
Moderate
23. The slowing of the American economy in 2008-2009 gave businesses a strong incentive to raise capital investment.
a.
True
b.
False
False
Moderate
24. The capital gains tax cut enacted in 2003 will hinder capital formation.
a.
True
b.
False
False
Moderate
25. The threat of confiscated private property diminishes the incentive to invest.
a.
True
b.
False
True
Easy
26. In the United States, the wage rates for high school graduates are growing faster than the wage rates for college
graduates.
a.
True
b.
False
False
Easy
27. The wage premium in the United States for college graduates over high school graduates has remained constant from
1978 to 2000.
a.
True
b.
False
False
Moderate
28. All other things being equal, a greater supply of scientists and engineers will increase the level of technology.
a.
True
b.
False
29. Because the Soviet Union educated more scientists and engineers than the United States, their level of economic
growth was higher.
a.
True
b.
False
30. Investment spending, capital formation, and rapid technological progress are directly related.
a.
True
b.
False
31. Because it is a market economy, in the United States all research and development is done by private business firms.
a.
True
b.
False
32. Productivity growth rates in the United States have remained fairly constant from 1948 to 2000.
a.
True
b.
False
False
Easy
33. Economists are still puzzled why growth rates in the United States fell from 1973 to 1995.
a.
True
b.
False
True
Easy
34. There is now general agreement among economists regarding the sources of the U.S. productivity slowdown that
occurred between 1973 and 1995.
a.
True
b.
False
False
Moderate
35. The change in the contribution of capital formation was the chief cause of the productivity slowdown in 1973-1995.
a.
True
b.
False
False
Easy
36. Technological change was a major contributor to the productivity speed-up from 1995-2000.
a.
True
b.
False
True
Easy
37. Improvements in human capital and education played a major role in the productivity improvements of the U.S.
economy from 1995 to 2009.
a.
True
b.
False
False
Moderate
38. Real wages usually lag behind the increases in labor productivity.
a.
True
b.
False
Moderate
39. The fastest growing productivity increases in the United States have occurred in the personal services sector.
a.
True
b.
False
False
Easy
40. The prices of telecommunications services have decreased due to productivity increases.
a.
True
b.
False
True
Easy
41. The “cost disease of personal services” phenomenon helps explain why medical care has become so expensive.
a.
True
b.
False
True
Moderate
42. The “cost disease of personal services” phenomenon predicts that the price of tickets to baseball games and cell phone
rates will increase at approximately the same rate.
a.
True
b.
False
False
Moderate
43. Development assistance is designed to spur population growth in poor countries.
a.
True
b.
False
False
Moderate
44. Foreign direct investment generally leads to technological advancements in poorer countries.
a.
True
b.
False
True
Easy
45. Industrialized countries generally have higher levels of educational attainment compared with poorer countries.
a.
True
b.
False
True
Easy
46. The productivity slowdown in the U.S. can be explained by geographic limitations and instability in the government.
a.
True
b.
False
False
Moderate
47. Poor health in developing countries encourages economic growth because working is a matter of life and death.
a.
True
b.
False
False
Moderate
48. When the difference between potential GDP and actual GDP increases, the nation usually suffers from increased
inflation.
a.
True
b.
False
False
Moderate
49. The fall of actual GDP below the level of potential GDP is a signal that the economy is in a recession.
a.
True
b.
False
True
Moderate
50. Economists believe that the same explanation for the rapid growth of costs applies to services, theatrical performances
and restaurant meals.
a.
True
b.
False
True
Moderate
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Three Pillars of Productivity Growth
51. The distinction between productivity levels and productivity growth rates is theoretical, and has no practical
application.
a.
True
b.
False
False
Moderate
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
Levels, Growth Rates, and the Convergence Hypothesis
52. The term “human capital” refers to how many people must work to produce a product.
a.
True
b.
False
False
Easy
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
Growth Policy: Improving Education and Training
Multiple Choice
53. Which of the following services have experienced declines in relative prices due to productivity increases?
a.
medical services
b.
restaurant meals
c.
theatrical performances
d.
Internet access services
Easy
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Three Pillars Of Productivity Growth
54. College tuition expenses have risen from 1982 to 2012 by
a.
an amount equal to prices in general.
b.
an amount greater than average prices.
c.
an amount less than average prices.
d.
the amount of the percentage increase in the overall CPI.
Easy
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Three Pillars Of Productivity Growth
55. The graph that relates hours of labor input to output is called the
a.
consumption function.
b.
conjunction function.
c.
capital function.
d.
production function.
Easy
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Three Pillars Of Productivity Growth
56. In general, as the amount of labor input increases, the amount of output
a.
increases.
b.
decreases.
c.
remains constant.
d.
increases only if the capital stock also increases.
a
Easy
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Three Pillars Of Productivity Growth
57. In general, as the amount of labor input decreases, the amount of output
a.
increases.
b.
decreases.
c.
remains constant.
d.
decreases only if the capital stock also decreases.
Easy
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Three Pillars Of Productivity Growth
58. A productivity increase is illustrated by a shift in the production function
a.
downward.
b.
leftward.
c.
upward.
d.
rightward.
c
Moderate
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Three Pillars Of Productivity Growth
59. A productivity decrease would be illustrated by a shift in the production function
a.
downward.
b.
leftward.
c.
upward.
d.
rightward.
a
Moderate
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Three Pillars Of Productivity Growth
60. Which of the following would tend to shift the production function upward?
a.
an increase in the number of hours worked
b.
an increase in population
c.
an increase in the size of the labor force
d.
an increase in the level of technology
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Three Pillars Of Productivity Growth
61. An increase in the number of hours worked would
a.
shift the production function upward.
b.
shift the production function downward.
c.
shift the production function outward.
d.
not shift the production function.
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Three Pillars Of Productivity Growth
62. Which furniture production process would have the highest production function?
a.
furniture made by handsaw and hammer
b.
furniture made with power equipment
c.
furniture made by grade school-educated workers
d.
furniture made in an automated furniture factory
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Three Pillars Of Productivity Growth
63. Which furniture production process would have the highest furniture prices?
a.
furniture made by handsaw and hammer
b.
furniture made with power equipment
c.
furniture made by grade school-educated workers
d.
furniture made in an automated furniture factory
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Three Pillars Of Productivity Growth
64. Which furniture production process would have the highest wage rates?
a.
furniture made by handsaw and hammer
b.
furniture made with power equipment
c.
furniture made by grade school-educated workers
d.
furniture made in an automated furniture factory
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Three Pillars Of Productivity Growth
65. Which retail operation would have the highest costs per book sold?
a.
a small independent bookstore
b.
a large retail bookstore chain
c.
an Internet seller of books
d.
All would have the same costs.
DISC: Productivity and growth
United States – BPROG: Analytic
Productivity and growth
The Three Pillars Of Productivity Growth
66. Which retail operation would have the lowest costs per book sold?
a.
a small independent bookstore
b.
a large retail bookstore chain
c.
an Internet seller of books
d.
All would have the same costs.
Moderate
DISC: Productivity and growth
United States – BPROG: Reflective Thinking – BPROG: Analysis
Productivity and growth
The Three Pillars Of Productivity Growth
67. Compared to workers in poor countries, workers in richer countries have
a.
lower productivity but higher wages.
b.
higher productivity and higher wages.
c.
higher productivity but lower wages.
d.
the same productivity but higher wages.
Moderate
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
The Three Pillars Of Productivity Growth
68. Compared to workers in richer countries, workers in developing countries have
a.
lower productivity and lower wages.
b.
higher productivity and higher wages.
c.
higher productivity but lower wages.
d.
the same productivity but lower wages.
a
Moderate
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
The Three Pillars Of Productivity Growth
69. For given inputs of labor and capital, if technology is better, labor productivity will be
a.
higher.
b.
lower.
c.
unchanged.
d.
characterized by increasing returns to scale.
a
Easy
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
The Three Pillars Of Productivity Growth
70. For a given technology and a given labor force, labor productivity will be ____ when the capital stock is ____.
a.
higher; larger
b.
lower; larger
c.
lower; unchanged.
d.
higher; smaller
a
Easy
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
The Three Pillars Of Productivity Growth
71. For given inputs of labor and capital, if technology is more primitive, labor productivity will be
a.
higher.
b.
lower.
c.
unchanged.
d.
characterized by increasing returns to scale.
Easy
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
The Three Pillars Of Productivity Growth
72. The definition of human capital refers to
a.
worker education and workers’ equipment.
b.
worker education and workers’ physical capital.
c.
workers’ equipment and workers’ physical capital.
d.
worker education and worker training.
Easy
DISC: Labor markets
United States – BPROG: Analytic
Labor markets
The Three Pillars Of Productivity Growth