Exam

Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1)
Which of the following will cause a reduction in output per worker in the long run run?

1)

_______
A)
an increase in the number of workers
B)
capital accumulation
C)
capital accumulation or technological progress
D)
expansionary monetary policy
E)
none of the above

2)
For this question, assume that N and K both increase by 6%. The assumption of constant returns to scale implies which of
the following?

2)

_______
A)
Y/N will increase by 6%.
B)
The capital-labor ratio will increase by 6%.
C)
Output (Y) will increase by 6%.
D)
Y/N will increase by less than 6%.

3)
For this question, assume that there are decreasing returns to capital, decreasing returns to labor, and constant returns to
scale. Now suppose that both capital and labor increase by 10%. Given this information, we know that output (Y) will

3)

_______
A)
increase by less than 20% but more than 10%.
B)
not change.
 C)
increase by 10%.
D)
increase by less than 10%.
E)
none of the above

4)
An upward-sloping straight line on a linear scale will become a(n) ________ on a logarithmic scale.

4)

_______
A)
upward sloping curve that gets continually flatter
B)
horizontal line
C)
downward sloping straight line
D)
upward sloping curve that gets continually steeper
E)
upward sloping straight line

5)
Which of the following best characterizes the economic growth for OECD countries since the mid-1970s?

5)

_______
A)
Growth has come to a complete halt.
B)
Growth has increased dramatically.
C)
Growth has increased slightly.
D)
Growth has slowed down.
E)
Growth has not changed since the 1950s and 1960s.

6)
Suppose there are two countries that are identical with the following exception. The saving rate in country A is greater
than the saving rate in country B. Given this information, we know that in the long run
6)

_______
A)
the capital-labor ratios (K/N) will be the same in both countries.
B)
the growth rate of output per capita will be the same in both countries.
C)
the growth rate of output per capita will be greater in A than in B.
D)
the growth rate of output per capita will be greater in B than in A.

7)
Between 1950 and 2000, standards of living in the OECD countries

7)

_______
A)
all increased at the same rate.
B)
decreased at the same rate.
C)
decreased, but at different rates.
D)
were converging.
E)
did not change at all.

8)
We know that output per worker (Y/N) will increase when which of the following occurs?

8)

_______
A)
an increase in K

B)

an increase in K/N
C)
an increase in the saving rate

D)

all of the above

 9)
Which of the following countries experienced the largest percentage increase in output per capita between 1974 and 2000?

9)

_______
A)
United States

B)

France
C)
Japan

D)

United Kingdom

10)
For this question, assume that there are decreasing returns to capital, decreasing returns to labor, and constant returns to
scale. An increase in the capital stock will cause which of the following?

10)

______
A)
not change in output
B)
decrease the capital-labor ratio
C)
a reduction in output
D)
an increase in output per capita
E)
none of the above

11)
The assumption of constant returns to scale implies that if N and K both decrease by 3%

11)

______
 A)
Y will decrease by less than 3%.
B)
output (Y) will decrease 6%.
C)
the capital-labor ratio (K/N) will decrease.
D)
Y will decrease by 3%.

12)
Which of the following countries had the highest level of output per capita in 1950?

12)

______
A)
United States

B)

France
C)
Japan

D)

United Kingdom

13)
Suppose there are two countries that are identical with the following exception. The saving rate in country A is greater
than the saving rate in country B. Given this information, we know that in the long run

13)

______
A)
the capital-labor ratio (K/N) will be greater in A than in B.
B)
the capital-labor ratio (K/N) will be the same in the two countries.
C)
the capital-labor ratio (K/N) will be greater in B than in A.
D)
economic growth will be higher in A than in B.

14)
Which of the following must occur to sustain economic growth in the long run?

14)

______
A)
technological progress

B)

a higher saving rate

C)
capital accumulation

D)

all of the above

15)
Which of the following represents the best indicator of improving living standards?

15)

______
A)
the growth rate of nominal GDP
B)
the rate of inflation
C)
the growth rate of nominal GDP per capita
D)
the growth rate of real GDP per capita
E)
the growth rate of real GDP

16)
Aggregate output will fall when which of the following occurs?

16)

______
A)
a reduction in K
B)
a reduction in N
C)
a reduction in the saving rate
 D)
a reduction in technology
E)
all of the above

17)
Suppose there are two countries that are identical with the following exception. The saving rate in country A is greater
than the saving rate in country B. Given this information, we know that in the long run

17)

______
A)
economic growth will be higher in A than in B.
B)
output per capita will be greater in A than in B.
C)
output per capita will be greater in B than in A.
D)
More information is needed to answer this question.

18)
Which of the following is a main conclusion about growth for OECD countries and the four rich countries examined in
the chapter?

18)

______
A)
There has been a convergence of output per capita since 1950.
B)
The growth rates have decreased since the mid-1970s.
C)
There has been a large increase in the standard of living since 1950.
D)
all of the above
E)
none of the above

19)
Given the broadest interpretation of technology, technology will include which of the following?

19)

______
 A)
the list of blueprints defining the types of products and the techniques available to produce them
B)
the political environment
C)
how well firms are run
D)
the organization and sophistication of markets
E)
all of the above

20)
Between 1950 and 2000, the rate of growth of output per capita was highest in which of the following countries?

20)

______
A)
United Kingdom

B)

Japan
C)
Germany

D)

United States

21)
In the OECD countries, there is a negative relationship between output per capita in 1950 and

21)

______
A)
output per capita in the 1990s.
B)
growth since 1950.
C)
distance from the equator.
D)
population.
E)
none of the above
 22)
For this question, assume that the stock of capital increases by 5% and employment increases by 3%. Given this
information, we know that

22)

______
A)
output per capita will increase by less than 5% and more than 3%.
B)
output per capita will increase by less than 3%.
C)
output per capita will increase by more than 3%.
D)
output per capita will increase by 8%.

23)
Research by Richard Layard indicates that an increase in a country's level of output per capita will

23)

______
A)
increase happiness in that country if output per capita is relatively low.
B)
generally have no effect on happiness in that country.
C)
always increase happiness in that country.
D)
always decrease happiness in that country.

24)
Given the narrow interpretation of technology, technology will include which of the following?

24)

______
A)
the organization and sophistication of markets
B)
how well firms are run
C)
the political environment
D)
none of the above
 25)
Over the past fifty years, convergence has generally occurred for all of the following groups of countries with the
exception of

25)

______
A)
the five richest countries.
B)
OECD countries.
C)
European countries.
D)
the "four tigers" in Asia.
E)
none of the above

26)
"Convergence" has been occurring among the OECD countries because

26)

______
A)
the richer countries have had higher growth rates than the poorer ones.
B)
the poorer countries have had positive growth rates, while the richer ones have had negative growth rates.
C)
the procedures for measuring output per capita have been changing.
D)
the richer countries give away more of their output than the poorer ones.
E)
the poorer countries have had higher growth rates than the richer ones.

27)
Which of the following countries had the lowest level of output per capita in 1950?

27)

______
A)
United States
 B)

France
C)
Japan

D)

United Kingdom

28)
For this question, assume that the stock of capital (K) increases by 6%. Holding all other factors constant, we know with
certainty that which of the following will occur?

28)

______
A)
Output will increase by 6%.
B)
Output will increase by less than 6%.
C)
The capital labor ratio will decrease.
D)
Output per capita will increase by 6%.
E)
none of the above

29)
The assumption of constant returns to scale suggests that if N and K both increase by 5%

29)

______
A)
output (Y) will increase by 10%.
B)
Y will increase by 5%.
C)
Y will increase by less than 10% and more than 5%.
D)
Y will increase by less than 5%.

30)
When using a logarithmic scale to plot output per capita over time, an upward-sloping curve that becomes increasingly
steep indicates

30)

______
A)
output per capita is not changing.
B)
output per capita is not defined.
C)
output per capita is growing by a constant amount each year.
D)
output per capita is growing by a constant percentage each year.
E)
output per capita is growing by an increasing percentage each year.

1)

2)
C

3)
C

4)
A

5)
D

6)
B

7)
D

8)
D
 9)
C

10)
D

11)
B

12)
A

13)
A

14)
A

15)
D

16)
E

17)
B

18)
D

19)
E

20)
B

21)
B
 22)
A

23)
A

24)
D

25)
E

26)
E

27)
C

28)
B

29)
A

30)
E