Question 1

When the production function shifts upward,we can expect the marginal product of capital to

Accepted Answer

A)   increase.
B)   decrease.
C)   remain constant.
D)   double in value.
E)   turn negative.F) D) and E)
G) A) and D)

Question 2

According to modern growth theory,the key to economic growth is

Accepted Answer

A)   paved roads.
B)   modern buildings.
C)   skilled labor.
D)   a large pool of unskilled labor.
E)   institutions.F) A) and B)
G) A) and C)

Question 3

According to modern growth theory,a country that wants to foster long-run economic growth and the accumulation of wealth should focus on

Accepted Answer

A)   its institutions.
B)   acquiring physical capital.
C)   its supply of unskilled labor.
D)   its educated workforce.
E)   acquiring modern buildings.F) C) and E)
G) B) and D)

Question 4

The graphical relationship between real gross domestic product (GDP) and capital is called the

Accepted Answer

A)   steady state.
B)   capital function.
C)   production function.
D)   investment function.
E)   marginal product curve.F) None of the above
G) A) and E)

Question 5

Use the following graph to answer the following questions.
 
-The marginal product of the third truck is __________ deliveries.

Accepted Answer

A)   12
B)   6
C)   36
D)   15
E)   2F) C) and D)
G) A) and E)

Question 6

An example of an institution that will decrease the expected payoff of investment is

Accepted Answer

A)   high and variable inflation.
B)   lower tax rates.
C)   private property rights.
D)   political stability.
E)   free trade.F) A) and C)
G) A) and D)

Question 7

Which of the following describes the correct direction of causality?

Accepted Answer

A)   economic growth growth-friendly incentives growth-friendly institutions
B)   growth-friendly incentives economic growth growth-friendly institutions
C)   growth-friendly institutions growth-friendly incentives economic growth
D)   economic growth growth-friendly institutions growth-friendly incentives
E)   growth-friendly institutions economic growth growth-friendly incentivesF) A) and B)
G) A) and C)

Question 8

Explain the difference between physical capital and human capital.

Accepted Answer

Physical capital refers to the stock of ...

Question 9

Use the following graph to answer the following questions.
 
-If net investment is positive,then

Accepted Answer

A)   the production function will shift upward.
B)   the production function will shift downward.
C)   there is an upward movement along the production function.
D)   there is a downward movement along the production function.
E)   there is an upward shift of the production function and an upward movement along the production function.F) D) and E)
G) All of the above

Question 10

In the economy,the level of capital will increase if

Accepted Answer

A)   depreciation is zero.
B)   investment is positive.
C)   investment is larger than net investment.
D)   net investment is larger than investment.
E)   net investment is positive.F) B) and C)
G) A) and B)

Question 11

The marginal product of an input is

Accepted Answer

A)   always positive.
B)   never positive.
C)   usually positive.
D)   always decreasing.
E)   always increasing.F) A) and E)
G) A) and D)

Question 12

When a country adopts a more efficient tax system,it is likely to

Accepted Answer

A)   have no effect on the production function.
B)   shift the production function upward.
C)   shift the production function downward.
D)   have no impact on technological innovation.
E)   have no impact on physical capital.F) C) and E)
G) A) and B)

Question 13

Bob owns and manages an apple orchard.In Bob's business,an example of physical capital would be

Accepted Answer

A)   a ladder.
B)   the apple trees.
C)   the water he uses on the trees.
D)   the number of workers he hires to pick the apples.
E)   Bob's level of education.F) All of the above
G) B) and D)

Question 14

The fundamental characteristic of modern growth theory is the focus on

Accepted Answer

A)   the production function.
B)   physical capital.
C)   natural resources.
D)   institutions.
E)   technological change.F) A) and D)
G) D) and E)

Question 15

Use the following graph to answer the following questions.
 
-If net investment is negative but technology has advanced,then

Accepted Answer

A)   the production function will shift upward and capital is unchanged.
B)   the production function will shift downward and capital is unchanged.
C)   there is an upward movement along the production function.
D)   there is a downward movement along the production function.
E)   there is an upward shift of the production function and a downward movement along the production function.F) A) and B)
G) B) and C)

Question 16

How does the aggregate production function measure the labor input used to produce goods and services? Explain.

Accepted Answer

The labor input is measured by human cap...

Question 17

What does it mean to say capital is the result of economic growth rather than it being the cause of economic growth?

Accepted Answer

A country can acquire new buildings and ...

Question 18

In a population,not all workers have a high school diploma.Suppose the size of the labor force increases but a smaller percentage of the labor force has a high school diploma.It is reasonable to expect that the larger labor force will ________ the human capital input and the smaller percentage of the labor force with a high school diploma will ________ the human capital input.

Accepted Answer

A)   decrease; increase
B)   decrease; decrease
C)   increase; decrease
D)   increase; have no effect on
E)   increase; increaseF) C) and D)
G) B) and D)

Question 19

The relationship between international aid and economic growth for less developed countries is

Accepted Answer

A)   positive,in that more aid means more growth.
B)   negative,in that less aid means less growth.
C)   indeterminate,because very few countries have received international aid.
D)   positive when financial funds are sent to the less developed countries but negative when developed countries help build capital goods in these countries.
E)   nonexistent,because some countries have received aid but realized no growth,whereas others have grown but have received no aid.F) B) and D)
G) D) and E)

Question 20

Use the following graph to answer the following questions.
 
-If more natural resources are discovered,then

Accepted Answer

A)   the production function will shift upward.
B)   the production function will shift downward.
C)   there will be an upward movement along the production function.
D)   there will be a downward movement along the production function.
E)   there will be no effect on the production function.F) A) and B)
G) B) and D)

Exam 25: Growth Theory

When a country adopts a more efficient tax system,it is likely to

Correct Answer
verified

Use the following graph to answer the following questions. -The marginal product of the third truck is __________ deliveries.

Correct Answer
verified

Which of the following describes the correct direction of causality?

Correct Answer
verified

Use the following graph to answer the following questions. -If more natural resources are discovered,then

Correct Answer
verified

How does the aggregate production function measure the labor input used to produce goods and services? Explain.

Correct Answer
verified
The labor input is measured by human cap...
View Answer

According to modern growth theory,the key to economic growth is

Correct Answer
verified

Correct Answer
verified

Use the following graph to answer the following questions. -If net investment is negative but technology has advanced,then

Correct Answer
verified

The fundamental characteristic of modern growth theory is the focus on

Correct Answer
verified

In the economy,the level of capital will increase if

Correct Answer
verified

Bob owns and manages an apple orchard.In Bob's business,an example of physical capital would be

Correct Answer
verified

Use the following graph to answer the following questions. -If net investment is positive,then

Correct Answer
verified

The marginal product of an input is

Correct Answer
verified

What does it mean to say capital is the result of economic growth rather than it being the cause of economic growth?

Correct Answer
verified
A country can acquire new buildings and ...
View Answer

The relationship between international aid and economic growth for less developed countries is

Correct Answer
verified

According to modern growth theory,a country that wants to foster long-run economic growth and the accumulation of wealth should focus on

Correct Answer
verified

The graphical relationship between real gross domestic product (GDP) and capital is called the

Correct Answer
verified

An example of an institution that will decrease the expected payoff of investment is

Correct Answer
verified

When the production function shifts upward,we can expect the marginal product of capital to

Correct Answer
verified

Explain the difference between physical capital and human capital.

Correct Answer
verified
Physical capital refers to the stock of ...
View Answer

Exam 25: Growth Theory

When a country adopts a more efficient tax system,it is likely to

Correct AnswerverifiedShow Answer

Use the following graph to answer the following questions. -The marginal product of the third truck is __________ deliveries.

Correct AnswerverifiedShow Answer

Which of the following describes the correct direction of causality?

Correct AnswerverifiedShow Answer

Use the following graph to answer the following questions. -If more natural resources are discovered,then

Correct AnswerverifiedShow Answer

How does the aggregate production function measure the labor input used to produce goods and services? Explain.

Correct AnswerverifiedThe labor input is measured by human cap...View AnswerShow Answer

According to modern growth theory,the key to economic growth is

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Use the following graph to answer the following questions. -If net investment is negative but technology has advanced,then

Correct AnswerverifiedShow Answer

The fundamental characteristic of modern growth theory is the focus on

Correct AnswerverifiedShow Answer

In the economy,the level of capital will increase if

Correct AnswerverifiedShow Answer

Bob owns and manages an apple orchard.In Bob's business,an example of physical capital would be

Correct AnswerverifiedShow Answer

Use the following graph to answer the following questions. -If net investment is positive,then

Correct AnswerverifiedShow Answer

The marginal product of an input is

Correct AnswerverifiedShow Answer

What does it mean to say capital is the result of economic growth rather than it being the cause of economic growth?

Correct AnswerverifiedA country can acquire new buildings and ...View AnswerShow Answer

The relationship between international aid and economic growth for less developed countries is

Correct AnswerverifiedShow Answer

According to modern growth theory,a country that wants to foster long-run economic growth and the accumulation of wealth should focus on

Correct AnswerverifiedShow Answer

The graphical relationship between real gross domestic product (GDP) and capital is called the

Correct AnswerverifiedShow Answer

An example of an institution that will decrease the expected payoff of investment is

Correct AnswerverifiedShow Answer

When the production function shifts upward,we can expect the marginal product of capital to

Correct AnswerverifiedShow Answer

Explain the difference between physical capital and human capital.

Correct AnswerverifiedPhysical capital refers to the stock of ...View AnswerShow Answer

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The labor input is measured by human cap...
View Answer

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Correct Answer
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Correct Answer
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Correct Answer
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A country can acquire new buildings and ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
verified

Correct Answer
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Correct Answer
verified
Physical capital refers to the stock of ...
View Answer