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Indicate whether the statement is true or false.
1. Since 1870 Canadian and U.S real GDP per person grew from below to above that in the United Kingdom. The
explanation for this is likely that productivity grew faster in Canada and the U.S. than in the United Kingdom.
a. True
b. False
2. Indonesians, for example, have a lower standard of living than Americans because they have a lower level of
productivity.
a. True
b. False
3. Over the period 1900-2020, China’s rate of economic growth exceeded that of Brazil.
a. True
b. False
4. In the United States in 2020 real GDP per person was about $64,000, while in some poor countries real GDP per person
was less than $6,500.
a. True
b. False
5. Like physical capital, human capital is a produced factor of production.
a. True
b. False
6. Assuming constant returns to scale, if two countries are otherwise the same, the one that is poorer grows faster.
a. True
b. False
7. Although growth rates across countries vary some, rankings of countries by income remain pretty much the same over
time.
a. True
b. False
8. An increase in capital increases productivity only if it is purchased and operated by domestic residents.
a. True
b. False
9. Economists generally believe that inward-oriented policies are more likely to foster growth than outward-oriented
policies.
a. True
b. False
10. Increases in both human capital per worker and physical capital per worker increase productivity.
a. True
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b. False
Indicate the answer choice that best completes the statement or answers the question.
11. Proprietary technology is knowledge that is known
a. but no longer used much.
b. but only recently discovered.
c. mostly by only those in a certain profession.
d. only by the company that discovered it.
12. The level of real GDP per person
a. differs widely across countries, but the growth rate of real GDP per person is similar across countries.
b. is very similar across countries, but the growth rate of real GDP per person differs widely across countries.
c. and the growth rate of real GDP per person are similar across countries.
d. and the growth rate of real GDP per person vary widely across countries.
13. The United Kingdom is
a. an advanced economy, and over the past century its rate of economic growth has been higher than that of the
United States.
b. an advanced economy, and over the past century its rate of economic growth has been lower than that of the
United States.
c. a middle-income country, and over the past century its rate of economic growth has been higher than that of
the United States.
d. a middle-income country, and over the past century its rate of economic growth has been lower than that of
the United States.
14. Suppose Japanese-based Toshiba Corporation builds and operates a new computer factory in the United States. Future
production from such an investment will
a. increase U.S. GNP more than it increases U.S. GDP.
b. increase U.S. GDP more than it increases U.S. GNP.
c. have no affect on U.S. GNP, but will increase U.S. GDP.
d. have no affect on U.S. GNP or GDP.
15. Which of the following can be measured by the level of real GDP per person?
a. Productivity and the standard of living
b. Productivity but not the standard of living
c. The standard of living but not productivity
d. Neither the standard of living nor productivity
16. Over the past century in the United States, real GDP per person has grown, on average, by about
a. 1 percent per year.
b. 2 percent per year.
c. 3 percent per year.
d. 4 percent per year.
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17. The traditional view of the production process is that capital is subject to
a. diminishing returns, so that other things the same, real GDP in poor countries should grow at a faster rate
than in rich countries.
b. diminishing returns, so that other things the same, real GDP in poor countries should grow at a slower rate
than in rich countries.
c. increasing returns, so that other things the same, real GDP in poor countries should grow at a faster rate than
in rich countries.
d. increasing returns, so that other things the same, real GDP in poor countries should grow at a slower rate than
in rich countries.
18. The key determinant of the standard of living in a country is
a. the amount of goods and services produced from each hour of a worker's time.
b. the total amount of goods and services produced within the country.
c. the total amount of its physical capital.
d. its growth rate of real GDP.
19. Suppose an economy experiences an increase in its saving rate. The higher saving rate leads to a higher growth rate of
productivity
a. more in the short run than in the long run.
b. more in the long run than in the short run.
c. in both the short run and the long run.
d. in neither the short run nor the long run.
20. From 1960 to 1990, in which of the following countries has investment resulted in economic growth sufficiently
higher than that in the United States?
a. India
b. Mexico
c. South Korea
d. Zimbabwe
21. Which of the following is an example of a renewable natural resource?
a. Farm equipment
b. Lumber
c. Natural gas
d. Human capital
22. The dictator of Turan has recently begun to arbitrarily seize farms belonging to his political opponents, and he has
given the farms to his friends. His friends don't know much about farming. The courts in Turan have ruled that the
seizures are illegal, but the dictator has ignored the rulings. Other things equal, we would expect that the growth rate in
Turan will
a. fall temporarily, but will return to where it was when the new owners learn how to farm.
b. increase because the total amount of human capital in the country will increase as the new owners learn how
to farm.
c. fall and remain lower for a long time.
d. not be affected unless widespread civil disorder or civil war results.
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23. The behavior of market prices over time indicates that natural resources are
a. a limit to economic growth.
b. unrelated to economic growth.
c. not a limit to economic growth.
d. the major determinant of productivity.
24. Which of the following countries has had the greatest growth rate of real GDP per person within the last 10 years?
a. Germany
b. Bangladesh
c. Argentina
d. India
25. Out of the following economic statistics, which is the best measure of economic prosperity?
a. The level of real GDP
b. The growth rate of real GDP
c. The level of nominal GDP
d. The price level
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Answer Key
1. True
2. True
3. True
4. True
5. True
6. True
7. False
8. False
9. False
10. True
11. d
12. d
13. b
14. b
15. c
16. b
17. a
18. a
19. a
20. c
21. b
22. c
23. c
24. a
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25. a
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