PRODUCTION AND GROWTH

1. If one wants to know how the material well-being of the average person has changed

over time the appropriate measure to look at is the growth

• a. rate of real GDP

• b. rate of nominal GDP.

• c. rate of per capita real GDP.

• d. in the percentage of the labor force that is employed

2. Per capita real GDP differs from per capita nominal GDP in that real GD

• a. measures the opportunity cost of growth

• b. has been adjusted for the time value of money.

• c. has been adjusted for inflation

• d. has been discounted to the present

Poor countries are poor for all of the following reasons except

• a. their technology is less than modern

• b. their labor productivity is low

• c. foreign investment funds are difficult to attract

• d. their labor force is too small

4. Of the following, which country experienced the fastest growth rate for the period

1900–1998?

• a. United States

• b. Japan

• c. Canada

• d. Brazil

5. Which of the following represents a productivity-enhancing investment in human

capital?

• a. a new labor-saving technology

• b. a new health clinic

• c. a new factory that will employ 1,000 workers

• d. an increase in fringe benefits, such as paid vacations and overtime pay

6. If the capital stock increases faster than employment, then we would expect

• a. both output and labor productivity to rise

• b. output to rise but labor productivity to fall.

• c. both output and labor productivity to fall

• d. output to fall but labor productivity to rise

7. As its capital stock increases, a nation will

• a. move to the right along a fixed production function

• b. move to the left along a fixed production function.

• c. find its production function shifting up

• d. find its production function shifting down.

8. 8. An increase in the capital stock causes labor productivity to

• a. decrease and the standard of living to increase

• b. increase and the standard of living to increase.

• c. decrease and the standard of living to decrease

• d. increase while the standard of living remains constant.

9. Investments in human capital are often opposed because

• a. investments in plant and machinery are more important.

• b. the increase in productivity comes with opportunity costs to workers and firms

• c. investments in plant and machinery will have greater monetary payoffs

• d. they rarely lead to long-term economic growth