Multiple Choice
Identify the letter of the choice that best completes the statement or answers the question.
|
|
1.
|
If one wants to know how the material well-being of the average person has changed over time in a given country, one should look at the
|
a.
|
level of real GDP.
|
|
b.
|
growth rate of nominal GDP.
|
|
c.
|
growth rate of real GDP.
|
|
d.
|
growth rate of real GDP per person.
|
|
|
|
|
2.
|
In 2004, Freedonia had a population of 2,700 and real GDP of about 11,610,000. In 2005 it had a population of 2,500 and real GDP of about 10,000,000. What was the approximate growth rate of real GDP per person in Freedonia between 2004 and 2005?
|
a.
|
7.5 percent
|
|
b.
|
12.5 percent
|
|
c.
|
20.5 percent
|
|
d.
|
35.5 percent
|
|
|
|
|
3.
|
The Peapod Restaurant uses all of the following to produce vegetarian meals. Which of them is an example of physical capital?
|
a.
|
The owner's knowledge of how to prepare vegetarian entrees.
|
|
b.
|
The money in the owner's account at the bank she borrowed money from.
|
|
c.
|
The tables and chairs in the restaurant.
|
|
d.
|
The land the restaurant was built on.
|
|
|
|
|
4.
|
Which of the following would be considered physical capital?
|
a.
|
the pizza oven at the Liquidity Preferences Tavern
|
|
b.
|
rivers on which goods are transported
|
|
c.
|
the skills and knowledge of a barber
|
|
d.
|
All of the above are correct.
|
|
|
|
|
5.
|
Which of the following is true?
|
a.
|
There are no renewable natural resources.
|
|
b.
|
The prices of most natural resources are stable or falling relative to other prices.
|
|
c.
|
Technology requires greater use of natural resources.
|
|
d.
|
Human capital is equivalent to technology.
|
|
|
|
|
6.
|
Using the production function and notation in the text, K/L measures
|
a.
|
natural resources per worker.
|
|
b.
|
human capital per worker.
|
|
c.
|
output per worker.
|
|
d.
|
physical capital per worker.
|
|
|
|
|
7.
|
Which of the following would increase productivity?
|
a.
|
an increase in the physical capital stock per worker
|
|
b.
|
an increase in human capital per worker
|
|
c.
|
an increase in natural resources per worker
|
|
d.
|
All of the above are correct.
|
|
|
|
|
8.
|
One of the Ten Principles of Economics in Chapter 1 is that people face tradeoffs. The growth that arises from capital accumulation is not a free lunch. It requires that society
|
a.
|
conserve resources for future generations.
|
|
b.
|
sacrifice consumption goods and services now in order to enjoy more consumption in the future.
|
|
c.
|
recycle resources so that future generations can produce goods and services with the accumulated capital.
|
|
d.
|
None of the above is correct.
|
|
|
|
|
9.
|
Suppose that Turkey undertakes a policy to increase its saving rate. This policy will likely
|
a.
|
have no impact on GDP growth.
|
|
b.
|
lead to higher GDP growth for a few years.
|
|
c.
|
lead to higher GDP growth for a period of several decades.
|
|
d.
|
lead to a permanently higher growth rate.
|
|
|
|
|
10.
|
The slope of the production function with capital per worker on the horizontal axis and output per worker on the vertical axis
|
a.
|
is positive and gets steeper as capital per worker rises.
|
|
b.
|
is positive and gets flatter as capital per worker rises.
|
|
c.
|
is negative and gets steeper as capital per worker rises.
|
|
d.
|
is negative and gets flatter as capital per worker rises.
|
|
|
|
|
11.
|
Which of the following is consistent with the catch-up effect?
|
a.
|
The United States had a higher growth rate before 1900 than after.
|
|
b.
|
After World War II the United States had lower growth rates than war-ravaged European countries.
|
|
c.
|
Although the United States has a relatively high level of output per person, its growth rate is rather modest compared to some countries.
|
|
d.
|
All of the above are correct.
|
|
|
|
|
12.
|
In the US each additional year of schooling has historically raised a person's wage on average by about
|
a.
|
2 percent.
|
|
b.
|
5 percent.
|
|
c.
|
10 percent.
|
|
d.
|
15 percent.
|
|
|
|
|
13.
|
Roughly what percentage of growth in real GDP per person in Britain between 1790 and 1980 was accounted for by improved nutrition according to the estimates of Robert Fogel?
|
a.
|
60%
|
|
b.
|
45%
|
|
c.
|
30%
|
|
d.
|
15%
|
|
|
|
|
14.
|
The dictator of Prchkuglia abolished all taxes except on land rent and pollution. Previously the country had taxes on income, sales, and buildings. Other things the same, relative to the previous tax system, in the long run the new tax system would
|
a.
|
reduce GDP per person and pollution.
|
|
b.
|
increase GDP per person while reducing pollution.
|
|
c.
|
have little effect on GDP per person or pollution, since all taxes stifle enterprise, and the companies will pay the tax and keep on polluting.
|
|
d.
|
the answer cannot be determined from this information.
|
|
|
|
|
15.
|
If the production function is y = k/2, y being GDP per worker, k being capital goods per worker, people save half their income, and the depreciation of capital goods is 10 percent, and y=200 in the current year, what is net domestic product in the following year?
|
a.
|
230
|
|
b.
|
200
|
|
c.
|
184
|
|
d.
|
the answer cannot be determined
|
|
|
|