Beruflich Dokumente
Kultur Dokumente
MULTIPLE CHOICE: Identify the choice that best completes the statement or answers the question.
2. In some East Asian countries, average income, as measured by real GDP per person, has recently
grown at an average annual rate that implies output will double about every
a. 10 years.
b. 15 years.
c. 20 years.
d. 25 years.
4. Last year Panglossia had real GDP of 27.0 billion. This year it had real GDP of 31.5 billion. Which
of the following changes in population is consistent with a 5 percent growth rate of real GDP per
person over the last year?
a. The population decreased from 88 million to 84 million.
b. The population decreased from 75 million to 73 million.
c. The population increased from 45 million to 50 million.
d. The population increased from 60 million to 62 million.
5. Productivity is defined as
a. the amount of difficulty that is involved in producing a given quantity of goods and
services.
b. the quantity of labor that is required to produce one unit of goods and services.
c. the quantity of goods and services produced from each unit of labor input.
d. the quantity of goods and services produced over a given amount of time.
6. Cedar Valley Furniture uses 5 workers, each working 8 hours, to produce 80 rocking chairs. What
is the productivity of these workers?
a. 2 chairs per hour
b. 10 chairs per hour
c. 1 hour per chair
d. 80 chairs
8. Which of the following best states economists' understanding of the facts concerning the
relationship between natural resources and economic growth?
a. A country with no or few domestic natural resources is destined to be poor.
b. Differences in natural resources have virtually no role in explaining differences in
standards of living.
c. Some countries can be rich mostly because of their natural resources and countries without
natural resources need not be poor, but can never have very high standards of living.
d. Abundant domestic natural resources may help make a country rich, but even countries
with few natural resources can have high standards of living.
9. Suppose that over the last ten years productivity grew faster in Oceania than in Freedonia and the
population of both countries was unchanged.
a. It follows that real GDP per person must be higher in Oceania than in Freedonia.
b. It follows that real GDP per person grew faster in Oceania than in Freedonia.
c. It follows that the standard of living must be higher in Oceania than in Freedonia.
d. All of the above are correct.
10. Which of the following would, by itself, reveal the most about a country’s standard of living?
a. its level of capital
b. the number of hours worked
c. its availability of natural resources
d. its productivity
11. Suppose a country imposes new restrictions on how many hours people can work. If these
restrictions reduce the total number of hours worked in the economy, but all other factors that
determine output are held fixed, then
a. productivity and output both rise.
b. productivity rises and output falls.
c. productivity falls and output rises.
d. productivity and output fall.
13. The traditional view that the production process has diminishing returns implies that
a. the increase in output growth from an increase in the saving rate rises over time, and that,
other things the same, rich countries should grow faster than poor ones.
b. the increase in output growth from an increase in the saving rate falls over time, and that,
other things the same, rich countries should grow faster than poor ones.
c. the increase in output growth from an increase in the saving rate rises over time, and that,
other things the same, poor countries should grow faster than rich ones.
d. the increase in output growth from an increase in the saving rate falls over time, and that,
other things the same, poor countries should grow faster than rich ones.
14. Suppose U.S.-based Intel Corporation builds and operates a new computer chip factory in
Honduras. Future production from such an investment would
a. increase Honduran GDP more than it would increase Honduran GNP.
b. increase Honduran GNP more than it would increase Honduran GDP.
c. not affect Honduran GNP, but would increase Honduran GDP.
d. have no affect on either Honduran GDP or GNP.
15. Which of the following statements is correct?
a. In an economy-wide sense, property rights are an important prerequisite for the price
system to work.
b. Property rights give people the ability to exercise authority over the resources they own.
c. Based on the available evidence, the existence of well-established and well-enforced
property rights appears to be associated with an enhanced standard of living.
d. All of the above are correct.
18. 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
19. Some poor countries appear to be falling behind rather than catching up with rich countries.
Which of the following could explain the failure of a poor country to catch up?
a. The poor country has outward-oriented trade policies.
b. The poor country allows foreign direct investment.
c. The poor country has poorly developed property rights.
d. All of the above are correct.
Exercise 2: Find the underlined parts that are incorrect in these statements and correct them:
11. Levels of real GDP per capita vary greatly around the world: more than half the world’s
A B C
population lives in countries that are still richer than the United States was in 1900.
D
12. The world economy contains examples of success and failure in the effort to achieve A
A
long-run economic growth. East Asian economies have done many things right and achieved
B C
low growth rates.
C
13. These are firm’s policies and institutions that increase savings and investment spending,
A B
A B C D
15. Growth accounting, which estimates the contribution of each factor to a country’s
A B
economic growth, has shown that declining total factor productivity, the amount of output
C
produced from a given amount of factor inputs, is key to long-run growth.
D
Problem 1
Suppose that in 1998, an economy has 1,000 workers, each has 1,900 working-hours per year. The
value of goods and services produced by one worker in an hour is $3.
Calculate real GDP of this economy in 1998
If in 1999 real GDP increase to $19 million while the number of workers and their working-hours per
year stay the same, what is the growth rate of the workers’ productivity? Without calculation can you
guess the economic growth rate in 1999?
What are determinants of productivity? What can policy-makers do to increase human capital per
worker?
Problem 2
Some data that at first might seem puzzling: The share of GDP devoted to investment was similar for
the United States and South Korea from 1960-1991. However, during these same years South Korea
had a 6 percent growth rate of average annual income per person, while the United States had only a 2
percent growth rate. If the saving rates were the same, why were the growth rates so different?