ECON 202 PRACTICE SET #2 – Flashcards
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A nation's standard of living is best measured by its
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real GDP per person.
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Which of the following statements is correct?
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The level of real GDP is a good gauge of economic prosperity, and the growth of real GDP is a good gauge of economic progress.
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Productivity is defined as
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the quantity of goods and services produced from each unit of labor input.
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What term do economists use to describe the relationship between the quantity of inputs used and the quantity of output produced?
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production function y=af (k,l,h,n)
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Which of the following items plays a role in determining productivity?
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D. all of the above SOO..... physical capital natural resources technological knowledge
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Industrial machinery is an example of
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a factor of production that in the past was an output from the production process.
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Productivity
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Explains most of the differences in the standard of living across countries.
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In 2007, Modern Electronics, Inc. produced 60,000 calculators, employing 80 workers, each of whom worked 8 hours per day. In 2008, the same firm produced 76,500 calculators, employing 85 workers, each of whom worked 10 hours per day. Between 2007 and 2008, productivity at Modern Electronics
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decreased by 4.00 percent. 80 x 8 = hours 60000/80 x 8 = yr 2007= 93.75 2008= 76,500/85x 10 = 90
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Which of the following is a determinant of productivity?
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ANSWER: d. All of the above are correct. SOOO... a. human capital per worker b. physical capital per worker c. natural resources per worker
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Which of the following is a part of your economics professor's human capital?
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the things she learned at some prestigious university
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In a market economy, we know that a resource has become scarcer when
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its price rises relative to other prices.
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Proprietary technology is knowledge that is
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known only by the company that discovered it.
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Technological knowledge refers to
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available information on how to produce things.
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The relationship between the quantity of output created and the quantity of inputs needed to create it is called
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the production function.
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Which of the following would increase productivity?
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ANSWER: All of the above are correct. SOOO.... a. an increase in the physical capital stock per worker b. an increase in human capital per worker c. an increase in natural resources per worker
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In a particular production process, if the quantities of all inputs used are increased by 60 percent, then the quantity of output increases by 60 percent as well. This means that
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the relevant production function has the constant-returns-to-scale property.
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Suppose there are constant returns to scale. Now suppose that over time a country doubles its workers, its natural resources, its physical capital, and its human capital, but its technology is unchanged. Which of the following would double?
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output, but not productivity
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"When workers already have a large quantity of capital to use in producing goods and services, giving them an additional unit of capital increases their productivity only slightly." This statement
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ANSWER All of the above are correct. SOOO... a. represents the traditional view of the production process. b. is an assertion that capital is subject to diminishing returns. c. is made under the assumption that the quantities of human capital, natural resources, and technology are being held constant.
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The catch-up effect can help explain
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the spectacular economic growth experienced by South Korea over the years 1960 to 1990.
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Refer to Figure 1. The curve becomes flatter as the amount of capital per worker increases because of
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diminishing returns to labor.
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The return to schooling for society is higher than the return to schooling for the individual if
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human capital conveys positive externalities.
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One of the Ten Principles of Economics in Chapter 1 is that people face tradeoffs. The growth that arises from capital accumulation is not a free lunch. It requires that society
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sacrifice consumption goods and services now in order to enjoy more consumption in the future.
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In the long run, a higher saving rate
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increases the level of productivity
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Other things the same, a country that increases its savings rate will have
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higher future capital and higher future real GDP per person.
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An increase in the saving rate would, other things the same,
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increase growth more for a poor country than for a rich country, but raise growth temporarily.
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Which of the following countries benefited significantly from the catch-up effect in the last half of the twentieth century?
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South Korea
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Which of the following provide benefits to society at large and not just to the person(s) who pursues it?
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both technological knowledge that is a public good and education
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When opening a print shop you need to buy printers, computers, furniture, and similar items. Economists call these expenditures
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capital investment.
