Chapter 10 Flashcards
Of the following, the most often used measure of changing living standards is
A) the growth rate of nominal GDP.
B) the growth rate of real GDP.
C) the growth rate of nominal GDP per capita.
D) the growth rate of real GDP per capita.
E) unemployment per capita.
D) the growth rate of real GDP per capita.
Suppose individuals wish to obtain the most accurate comparison of living standards between the US and Saudi Arabia. To do so, one would convert Saudi Arabian output into dollars using
A) the current nominal exchange rate.
B) the current real exchange rate.
C) the prior year’s real exchange rate.
D) an average of the last five years’ exchange rates.
E) purchasing power parity methods.
E) purchasing power parity methods.
Which of the following is a main conclusion about growth for OECD countries and the four rich countries examined in the chapter?
A) There has been a large increase in the standard of living since 1950.
B) The growth rates have decreased since the mid-1970s.
C) There has been a convergence of output per capita since 1950.
D) all of the above
D) all of the above
In the OECD countries, there is a negative relationship between output per capita in 1950 and A) growth since 1950. B) output per capita in the 1990s. C) distance from the equator. D) population.
A) growth since 1950.
When switching from the “current exchange rate” method to the “purchasing power parity” method, India’s standard of living in dollars
A) decreases.
B) remains essentially the same.
C) rises, but still remains far below that of the U.S.
D) rises almost to the level of the U.S.
E) leapfrogs over that of the U.S.
C) rises, but still remains far below that of the U.S.
Which of the following countries had the highest rate of growth of output per capita between 1950 and 2011? A) United States B) France C) Japan D) United Kingdom
C) Japan
By 2011, which of the following countries had the highest level of real output per capita? A) United States B) France C) Japan D) United Kingdom
A) United States
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 decrease by 5%. Given this information, we know that output (Y) will
A) not change.
B) decrease by less than 5%.
C) decrease by 5%.
D) decrease by more than 5% but less than 10%.
E) none of the above
C) decrease by 5%.
For this question, assume that there are decreasing returns to capital, decreasing returns to labor, and constant returns to scale. A reduction in the capital stock will cause which of the following? A) a reduction in output B) no change in output C) an increase in output per capita D) increase the capital-labor ratio
A) a reduction in output
For this question, assume that the production function exhibits the same characteristics as those presented in the textbook. Based on these characteristics (i.e., assumptions), successive and equal increases in capital per worker will cause which of the following to occur?
A) Output per worker will decline.
B) Output per worker will not change.
C) Output per worker will increase by a decreasing amount.
D) Output per worker will increase by a larger amount.
C) Output per worker will increase by a decreasing amount.
For this question, assume that a country experiences a permanent increase in its saving rate. Which of the following will occur as a result of this increase in the saving rate?
A) a permanently faster growth rate of output
B) a permanently higher level of output per capita
C) a permanently higher level of capital per worker
D) all of the above
E) both B and C.
E) both B and C.
Which of the following must occur to sustain economic growth in the long run? A) technological progress B) capital accumulation C) a higher saving rate D) all of the above
A) technological progress
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
A) the growth rate of output per capita will be greater in B than in A.
B) the growth rate of output per capita will be greater in A than in B.
C) the capital-labor ratios (K/N) will be the same in both countries.
D) the growth rate of output per capita will be the same in both countries.
D) the growth rate of output per capita will be the same in both countries.
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
A) the capital-labor ratio (K/N) will be greater in B than in A.
B) the capital-labor ratio (K/N) will be greater in A than in B.
C) the capital-labor ratio (K/N) will be the same in the two countries.
D) economic growth will be higher in A than in B.
B) the capital-labor ratio (K/N) will be greater in A than in B.
Assume that constant returns to scale exists and that N and K both increase by 2%. Given this information, we know that
A) output (Y) will increase by 4%.
B) Y will increase by 2%.
C) Y will increase by less than 2%.
D) Y will increase by less than 4% and more than 2%.
B) Y will increase by 2%.
