Question 1

Income and happiness are __________ related.

Accepted Answer

A)  negatively
B)  independently
C)  reluctantly
D)  positively
E)  Economist do not study such questions

Question 2

An increase in the quantity of capital per worker would

Accepted Answer

A)  rotate the per-worker production function outward
B)  rotate the per-worker production function inward
C)  shift the per-worker production function downwards
D)  shift the per-worker production function upwards
E)  result in movement along the current per-worker production function

Question 3

Since 1996,

Accepted Answer

A)  U.S. productivity growth skyrocketed as more computers were installed
B)  the computer sector has grown faster than the U.S. economy as a whole
C)  spending on computers has been approximately constant as a fraction of total U.S. investment spending
D)  the contribution of computers to U.S. productivity growth has been negative
E)  computing technology did not improve enough to have a measurable impact on U.S. productivity

Question 4

What is the definition of productivity?

Accepted Answer

A)  output plus quantity of input
B)  output minus quantity of input
C)  quantity of input divided by output
D)  output divided by quantity of input
E)  output times quantity of input

Question 5

The law of diminishing marginal returns states that as the quantity of capital per worker increases, other things constant, output per worker eventually

Accepted Answer

A)  increases at a constant rate
B)  increases at a decreasing rate
C)  increases at an increasing rate
D)  decreases
E)  remains constant

Question 6

Over the last 100 years, the U.S. labor productivity growth rate experienced its largest declines

Accepted Answer

A)  during the Great Depression
B)  in the 1940s
C)  during the 1950s
D)  during the 1980s
E)  a and c

Question 7

In contrast to government research and development, private sector R&D has

Accepted Answer

A)  more impact on productivity, since much government R&D focuses narrowly on military applications
B)  more impact on productivity, since much government R&D focuses narrowly on the service sector
C)  more impact on productivity, since much government R&D focuses narrowly on not-for-profit activities
D)  less impact on productivity, since the government is more motivated and able to hire better people and facilities
E)  less impact on productivity, since firms tend to hold back on research when results are easily copied

Question 8

If both total employment and total output always grew by 2 percent each year, what would the annual growth in labor productivity in an economy be over a decade?

Accepted Answer

A)  0 percent
B)  2 percent
C)  10 percent
D)  20 percent
E)  2 percent times the size of the labor force

Question 9

Which of the following is not an example of an event that fosters instability?

Accepted Answer

A)  September 11, 2001
B)  A greater threat to airport security
C)  The Frankfurt Book Fair where publishers from around the world gather
D)  Suicide bombers attacking shops and restaurants
E)  All of the answers foster instability

Question 10

Basic research

Accepted Answer

A)  usually has a larger immediate payoff than applied research
B)  is more practical than applied research
C)  is a search for general knowledge without a specific product or procedure in mind
D)  is research done by a firm to market a good
E)  is research done by a firm during production of a good

Question 11

Long-term growth in production can be explained by

Accepted Answer

A)  an improvement in the quality of resources available
B)  a gradual but consistent rise in the price level
C)  a rapid and accelerating increase in the price level
D)  a trade surplus that leads to the accumulation of gold
E)  the peaks and troughs of economic fluctuations

Question 12

Between the 1880s and the early 21st century, U.S. productivity increased at a constant annual rate.

Accepted Answer

A) True 
 B)False

Question 13

Labor productivity is measured by

Accepted Answer

A)  total employment/total output
B)  total output/total employment
C)  labor force/total output
D)  total output/labor force
E)  total output/potential employment

Question 14

People in affluent countries may not be getting any happier over time because

Accepted Answer

A)  people greatly value the luxuries they have and what matters is absolute income
B)  people begin taking luxuries for granted and income does not matter
C)  what matters is relative income and perceptions of luxuries do not matter
D)  people begin taking luxuries for granted and what matters is absolute income
E)  people begin taking luxuries for granted and what matters is relative income

Question 15

Per capita GDP in the United States has declined since 1950.

Accepted Answer

A) True 
 B)False

Question 16

In order for a society to have a rising standard of living, output per worker must grow

Accepted Answer

A)  more slowly than the labor force
B)  at the same rate as the population
C)  faster than the population
D)  more slowly than the population
E)  at a rate of 3 percent per year and population must grow at a rate of 5 percent per year

Question 17

Research and development contributes most to productivity growth through its impact on the

Accepted Answer

A)  quantity of labor available
B)  quantity of capital goods available
C)  quality of labor available
D)  quality of capital goods available
E)  use of energy

Question 18

Which of the following would not increase labor productivity?

Accepted Answer

A)  technological change
B)  an increased amount of capital per unit of labor
C)  a lower unemployment rate
D)  greater job experience for the work force
E)  all of the above increase labor productivity

Question 19

A small change in the rate of productivity growth will have

Accepted Answer

A)  a small impact on output in both the short run and the long run
B)  a large impact on output in both the short run and the long run
C)  a small impact on output in the short run but a large impact in the long run
D)  a large impact on output in the short run but a small impact in the long run
E)  no effect on output at all

Question 20

An increase in labor productivity necessarily means an increase in real GDP per capita if

Accepted Answer

A)  real GDP increases
B)  the employment growth rate is greater than the population growth rate
C)  the employment growth rate is less than the population growth rate
D)  the size of the labor force remains constant
E)  real GDP increases more rapidly than nominal GDP

Exam 8: Productivity and Growth

What is the definition of productivity?

Correct AnswerverifiedShow Answer

The law of diminishing marginal returns states that as the quantity of capital per worker increases, other things constant, output per worker eventually

Correct AnswerverifiedShow Answer

Over the last 100 years, the U.S. labor productivity growth rate experienced its largest declines

Correct AnswerverifiedShow Answer

Basic research

Correct AnswerverifiedShow Answer

Which of the following is not an example of an event that fosters instability?

Correct AnswerverifiedShow Answer

An increase in labor productivity necessarily means an increase in real GDP per capita if

Correct AnswerverifiedShow Answer

If both total employment and total output always grew by 2 percent each year, what would the annual growth in labor productivity in an economy be over a decade?

Correct AnswerverifiedShow Answer

Labor productivity is measured by

Correct AnswerverifiedShow Answer

Income and happiness are __________ related.

Correct AnswerverifiedShow Answer

In order for a society to have a rising standard of living, output per worker must grow

Correct AnswerverifiedShow Answer

Which of the following would not increase labor productivity?

Correct AnswerverifiedShow Answer

In contrast to government research and development, private sector R&D has

Correct AnswerverifiedShow Answer

Between the 1880s and the early 21st century, U.S. productivity increased at a constant annual rate.

Correct AnswerverifiedShow Answer

An increase in the quantity of capital per worker would

Correct AnswerverifiedShow Answer

Per capita GDP in the United States has declined since 1950.

Correct AnswerverifiedShow Answer

Since 1996,

Correct AnswerverifiedShow Answer

A small change in the rate of productivity growth will have

Correct AnswerverifiedShow Answer

Research and development contributes most to productivity growth through its impact on the

Correct AnswerverifiedShow Answer

Long-term growth in production can be explained by

Correct AnswerverifiedShow Answer

People in affluent countries may not be getting any happier over time because

Correct AnswerverifiedShow Answer

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