Chapter 7 Production and Growth PDF

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Chapter 7 - Production and Growth 1. What is the most appropriate measure of a nation’s standard of living? a. real GDP b. real GDP per person c. nominal d. nominal GDP per person GDP ANSWER: b 2. Which statement best explains the importance of real GDP per person? a. It is a useful measure of economic growth. b. It is a useful measure of the health of citizens. c. It is a useful measure of the cost of living. d. It is a useful measure of well-being. ANSWER: d 3. Which of the following best describes changes in the average well-being in a country? a. the growth rate of the b. the growth rate of nominal GDP unemployed c. the growth rate of real GDP d. the growth rate of real GDP per person ANSWER: d 4. How does income in developing countries like India and Pakistan compare with that in Canada? a. It’s about 1/16 or less of that in developed countries like Canada. b. It’s about 1/8 of that in developed countries like Canada. c. It’s about 1/4 of that in developed countries like Canada. d. It’s about 1/3 to 1/2 of that in developed countries like Canada. ANSWER: b 5. Over the past century in Canada, by how much has real GDP per person grown? a. by about 1 percent per year b. by about 2 percent per year c. by about 4 percent per year d. by about 8 percent per year ANSWER: b 6. In approximately how many years will real GDP per person in Canada double, given its average growth rate during the past century? b. 35 a. 25 years years c. 50 d. 80 years years ANSWER: b 7. Over the past 100 years, Canadian real GDP per person has doubled about every 35 years. If in the next 100 years it doubles every 20 years, then what will Canadian real GDP per person be a century from now? a. 10 times higher than it is b. 12 times higher than it is now now c. 16 times higher than it is d. 32 times higher than it is Copyright Cengage Learning. Powered by Cognero.

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Chapter 7 - Production and Growth now ANSWER: d

now

8. Which statement best characterizes the variations in real GDP per person and its rate of growth across countries? a. Real GDP per person differs widely across countries, but the growth rate of real GDP per person is similar across countries. b.Real GDP per person is very similar across countries, but the growth rate of real GDP per person differs widely across countries. c. Real GDP per person and the growth rate of real GDP per person are similar across countries. d.Real GDP per person and the growth rate of real GDP per person vary widely across countries. ANSWER: d 9. Over the past century in Canada, by how much has average income grown as measured by real GDP per person? a. about 1 percent per year, which implies a doubling about every 70 years b. about 2 percent per year, which implies a doubling about every 35 years c. about 3.5 percent per year, which implies a doubling about every 20 years d. about 4 percent per year, which implies a doubling about every 17.5 years ANSWER: b 10. As measured by real GDP per person, approximately how much higher is average income in Canada today than it was 140 years ago? a. 8 times higher b. 10 times higher c. 13 times higher d. 17 times higher ANSWER: d 11. How does income per person in Canada compare with income per person in China and India? a. It is about 3.5 times that in China and 8 times that in India. b. It is about 12 times that in China and 10 times that in India. c. It is about 10 times that in China and 13 times that in India. d. It is about 18 times that in China and 16 times that in India. ANSWER: a 12. Which country had the highest growth rate between 1900 and 2014? a. China b. Brazil d. the United Kingdom c. Mexic o ANSWER: b 13. Compared to the income of the typical Canadian 144 years previously, how much was the income of the typical Pakistani in 2014? Copyright Cengage Learning. Powered by Cognero.

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Chapter 7 - Production and Growth a. about 1/2 as much c. about the same

b. about 2/3 as much d. about 2 times as much

ANSWER: d 14. Which country had the lowest growth rate over the period 1870 and 2014? b. Mexico a. the United Kingdom c. Brazil d. the United States ANSWER: a 15. How large was the growth rate of Japan over the period 1890–2014? a. 1.5 percent b. 1.75 percent c. 2.59 d. 3.02 percent percent ANSWER: c 16. Which nation experienced average rates of economic growth of more than 2.0 percent between 1900 and 2014? a. Brazil b. India d. the United Kingdom c. Banglades h ANSWER: a 17. In 1870, what was the richest country in the world? a. Canada b. the United States d. France c. the United Kingdom ANSWER: c 18. According to a 1998 list published by American Heritage magazine, who was the richest American of all time? a. Henry Ford b. Warren Buffett c. John D. Rockefeller d. Bill Gates ANSWER: c 19. Which statement best describes the relationship between the initial wealth and the growth rate of a country? a. Countries with the highest growth rates over the past 140 years are the ones that had the highest level of real GDP 140 years ago. b.Countries that were rich 140 years ago had little fluctuation around their average growth rates during the past 100 years. c. Though the catch-up effect may suggest otherwise, the data show no strong relationship between initial conditions and growth rates. d.Over the past 140 years, the United States had the highest real GDP growth rate, and now it has the highest real GDP per person. Copyright Cengage Learning. Powered by Cognero.

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Chapter 7 - Production and Growth ANSWER: c 20. Which statement best defines productivity? a. Productivity is the ability of a company to generate profit. b. Productivity is the quantity of goods and services that a nation can produce in a year. c. Productivity is the quantity of goods or services that a worker can produce in one hour. d. Productivity is the ability of a company to produce goods and services. ANSWER: c 21. What is the average amount of goods and services produced from each hour of a worker’s time called? b. per capita national a. per capita GDP income c. productivity d. human capital ANSWER: c 22. How is a nation's standard of living determined? a. by its productivity b. by its gross domestic product d. by the size of its labour force c. by its national income ANSWER: a 23. Last year, real GDP per person in Midlothian was $8000. The year before, it was $6000. What was the growth rate of real GDP per person? b. 16.2 percent a. 10 percent c. 25 d. 33.33 percent percent ANSWER: d 24. Last year, real GDP in Oceania was $620 billion and the population was 2.3 million. The year before, real GDP was $502 billion and the population was 2.0 million. What was the approximate growth rate of real GDP per person? a. 3 percent b. 7 percent c. 10 d. 17 percent percent ANSWER: b 25. In 2018, real GDP in the Kingdom of Fife was $500 billion and the population was 2 million. In 2019, real GDP was $660 billion and the population was 2.2 million. What was the approximate growth rate of real GDP per person? a. 11 percent b. 14 percent d. 20 percent c. 17 percent ANSWER: d 26. In 2018, Freedonia had a population of 2700 and real GDP of about $1,080,000. In 2017, it had a population of 2500 Copyright Cengage Learning. Powered by Cognero.

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Chapter 7 - Production and Growth and real GDP of about $1,000,000. What was the approximate growth rate of real GDP per person in Freedonia between 2017 and 2018? a. 0 b. 2.5 percent percent d. 7.5 c. 5 percent percent ANSWER: a 27. How does productivity explain the differences in standard of living across countries? a. Productivity tends to be lower in countries with high population, and therefore in those countries standards of living are lower. b.Productivity explains very little of the differences across countries in the standard of living. c. Productivity explains some, but not most, of the differences across countries in the standard of living. d.Productivity explains most of the differences across countries in the standard of living. ANSWER: d 28. What is a correct way to measure productivity? a. divide the number of hours worked by output b. divide output by the number of hours worked c. divide the number of workers by output d. divide output by the number of workers ANSWER: b 29. Kawartha Furniture uses 8 workers working 10 hours to produce 160 rocking chairs. What is the productivity of these workers? a. 1 chair per hour b. 2 chairs per hour d. 80 chairs per c. 10 chairs per day day ANSWER: b 30. Why are Canadian workers more productive than the Chinese? a. because Canada is a federal state b. because Canadians have more capital to work with c. because prices are higher in Canada than in China d. because the most productive Chinese workers have emigrated to Canada ANSWER: b 31. Which statement best describe the relationship between productivity and standard of living? a. International trade makes a country’s productivity irrelevant. b. A country’s standard of living and its productivity are closely related. Copyright Cengage Learning. Powered by Cognero.

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Chapter 7 - Production and Growth c. Productivity only increases revenue to investors, while general well-being is not affected. d. A rich country can enjoy a high standard of living without the need for high productivity. ANSWER: b 32. Tom works 6 hours a day and Jerry works 8 hours. Tom can produce 6 baskets of goods while Jerry can produce 7 baskets. What can we conclude? a. Tom’s productivity is greater than Jerry’s. b. Tom’s and Jerry’s productivities are equal because they both work one day. c. Tom’s and Jerry’s productivities cannot be compared. d. Tom’s productivity is lower than Jerry’s. ANSWER: a 33. Monica works 8 hours and produces 7 units of goods per hour. Rachel works 6 hours and produces 10 units of goods per hour. What can we conclude? a. Monica’s productivity and output are greater that Rachel’s. b. Monica’s productivity is greater than Rachel’s, but Monica’s output is less. c. Rachel’s productivity and output are greater than Monica’s. d. Rachel’s productivity is greater that Monica’s, but Rachel’s output is less. ANSWER: c 34. Lesley looks over reports on four of her workers. Smith made 30 baskets in 6 hours. Dex made 40 baskets in 10 hours. Leo made 55 baskets in 10 hours. Neve made 21 baskets in 3 hours. Who has the greatest productivity? b. Smith a. Nev e c. Dex d. Leo ANSWER: a 35. What is a direct determinant of productivity? a. human capital b. wage d. unemployment c. price of natural resources rate ANSWER: a 36. What do economists call the inputs used to produce goods and services? a. productivity b. capitalization indicators producers c. production functions d. factors of production ANSWER: d 37. What do economists call the equipment and structures available to produce goods and services? a. physical capital b. human capital d. technology c. production inputs Copyright Cengage Learning. Powered by Cognero.

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Chapter 7 - Production and Growth ANSWER: a 38. What would an economist call the tractors, hay balers, and combine harvesters that are used on a farm? a. human capital b. physical capital d. technological c. production resources knowledge ANSWER: b 39. Which of the following would NOT be considered physical capital? a. a sewing machine in an alterations shop b. a computer used to help Mercury Delivery Service keep track of their orders c. on-the-job training d. a desk used in an accountant’s office ANSWER: c 40. Which of the following would be considered physical capital? a. the projector at a cinema b. milk and cheese c. the skills and knowledge of a chef d. the number of hours people spend in the gym ANSWER: a 41. What best defines human capital? a. the knowledge and skills that workers acquire through education, training, and experience b. the stock of equipment and structures that is used to produce goods and services c. the total number of workers in the labour force d. the total amount that is paid in wages in an economy ANSWER: a 42. Which of the following is considered human capital? a. the number of computers available in schools and universities b. the average percentage of income people give to charity c. the number of persons in the labour force d. knowledge acquired from an apprenticeship program ANSWER: d 43. Which of the following is considered human capital? a. lunches served in a school cafeteria b. a new convection oven c. an apprentice chef working in an upscale Copyright Cengage Learning. Powered by Cognero.

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Chapter 7 - Production and Growth restaurant d. the pots and pans used to prepare meals ANSWER: c 44. Which of the following is considered human capital? a. better working conditions b. safety in the workplace c. the things you have learned this semester d. machinery that requires a human to operate ANSWER: c 45. Clive Lloyd is a professor. Which of the following is a part of his human capital? a. his experience in the classroom b. the computer he uses c. the software he uses to assess students’ work d. the amount of time he spends with his students ANSWER: a 46. Which of the following best describes natural resources? a. native abilities that workers might possess b. production inputs such as land, rivers, and mineral deposits c. knowledge that is freely available and is used in production d. public schools and universities where workers are prepared for life, for which companies do not have to pay ANSWER: b 47. Which list contains, in this order, natural resources, human capital, and physical capital? a. for a restaurant: the land where it stands; the things the kitchen; the freezers where the steaks are kept b. for a furniture company: wood; the company cafeteria; saws c. for a railroad: fuel; railroad engineers; railroad tracks d. for an oil company: the oil it brings to surface; the rigs; the refineries using its oil ANSWER: c 48. What is an example of a nonrenewable resource? a. natural b. wind power gas c. livestock d. a forest ANSWER: a 49. In a market economy, what is scarcity of resources most clearly reflected in? a. supply b. demand c. market d. the stock of the resource Copyright Cengage Learning. Powered by Cognero.

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Chapter 7 - Production and Growth prices ANSWER: c 50. In a market economy, when do we know that a resource has become scarcer? a. when its price rises relative to other prices b. when it is nonrenewable and some of it is used c. when substitutes exist d. when there are no substitutes ANSWER: a 51. In a market economy, what does the real, or inflation-adjusted, price of a resource measure? b. relative scarcity a. contribution to revenue c. relative importance d. contribution to efficiency ANSWER: b 52. What indicates greater scarcity of a natural resource? b. a decrease in its supply a. an increase in its demand c. an increase in its price d. a decrease in its stock ANSWER: c 53. Which has been happening to the market prices of most natural resources (adjusted for inflation)? a. They have been rising. b. They have been stable or rising. d. They have been falling. c. They have been stable or falling. ANSWER: c 54. Based on historical data on the prices of natural resources, which statement best describes how natural resources limit economic growth? a. Prices have been increasing, which shows that natural resources become scarcer and this impedes growth. b.Prices of natural resources have been fluctuating, which shows that there is no correlation between growth and natural resources. c. Prices of natural resources have been decreasing in constant dollars, which shows that natural resources are not scarcer than they were in the past, thus economic growth is not limited by natural resources. d.Prices do not show whether resources limit growth because the natural resources that economies use are not the same today as those in the past. ANSWER: c 55. Which statement best explains the falling inflation-adjusted prices of most of the natural resources? a. Most are renewable; therefore, the supply of natural resources is increasing. b. Our ability to conserve natural resources is increasing faster than their depletion. Copyright Cengage Learning. Powered by Cognero.

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Chapter 7 - Production and Growth c. The demand for natural resources is diminishing due to the discovery of new substitutes. d. New deposits of natural resources have been discovered in emerging markets. ANSWER: b 56. What would we expect to happen with prices or quantities of natural resources if they were becoming scarcer? a. We would expect prices to be rising relative to other prices, as they have been. b. We would expect prices to be rising relative to other prices, but this has not occurred. c. We would expect known quantities to be increasing, as they have been. d. We would expect known quantities to be falling, but this has not occurred. ANSWER: b 57. A leading environmental group recently published a report contending that humans are running a “resource deficit” because we are using natural resources faster than they can be regenerated. The group claims that this means that economic growth will eventually stop, and will even be reversed. How would an economist respond to this report? a. An economist would agree with the report, and would point to rising natural resource prices as evidence. b.An economist would agree with the report, but wouldn’t think it was important because emerging markets are likely to discover additional natural resources. c. An economist would disagree with the report, in part because it ignores the mitigating effects of technological change. d.An economist would disagree with the report because labour and capital are the primary determinants of growth, and since they are plentiful, growth will not slow down. ANSWER: c 58. Which statement best explains economists’ understanding of the facts concerning the relationship between natural resources and economic growth? a. A country with few or no domestic natural resources is destined to remain undeveloped. 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. ANSWER: d 59. In the country of Kasnia, the price of copper increased from $6 per kilogram to $6.60 per kilogram during a time when the overall price level increased by 6 percent. During this period, what happened to the real price of copper? a. It has increased by about 2 percent. b. It has decreased by about 4 percent. d. It has increased by about 10 percent. c. It has decreased by about 8 percent. ANSWER: b Copyright Cengage Learning. Powered by Cognero.

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Chapter 7 - Production and Growth 60. Which statement best defines proprietary technology? a. It is knowledge that is known but no longer relevant in a market. b. It is knowledge that is known, but has only recently been discovered. c. It is knowledge that is known widely by those in a profession. d. It is knowledge that is known only by the company that discovers it. ANSWER: d 61. A management professor discovers a way for corporate management to operate more efficiently. He publishes his findings in a journal. How are his findings best defined? a. proprietary knowledge, because only who the person pays for the journal has access to the findings b...