# 1.

The average annual growth rates of labor productivity from 1960 to 1973 were _____ the average rates over the period from 1973 to 1995. YES more rapid than slower than NO about the same as more rapid in the U.S., but slower in other industrialized countries slower in the U.S., but more rapid in other industrialized countries Feedback For more information, see p. 193 of your textbook. 2. Real GDP per person in Northland is \$30,000, while real GDP in Southland is \$10,000, However, Northland's real GDP per person is growing at 1 % per year and Southland's is growing at 3% per year. If these growth rates persist indefinitely, then: Northland's real GDP per person will decline until it equals Southland's. Northland's real GDP per person will always be greater than Southland's. Southland's real GDP per person will always be less than Northland's. OK Southland's real GDP per person will eventually be greater than Northland's. Southland's real GDP per person will catch up to Northland's, but never exceed Northland's. 3. Entrepreneurs contribute to increased average labor productivity in each of the following ways EXCEPT by: introducing new production methods. implementing new technological processes. developing new products. creating new services. OK assigning workers to jobs. 4. Increases in living standards, as measured by real GDP per person, are primarily the result of increases in: population. the money supply. government budget surpluses. trade surpluses. OK average labor productivity. 5. Fred and Barney fill egg cartons with eggs. Fred just started the job and can only fill 20 cartons an hour. Barney has significant on-the-job experience that allows him to fill 40 cartons an hour. Both Fred and Barney work 40 hours a week. Fred's average weekly productivity is _____ cartons; Barney's average weekly productivity is ____ cartons; and as a team their average weekly productivity is _____ cartons. 20; 40; 60 20; 40; 30 20; 40; 4,800 OK 800; 1,600; 1,200 800; 1,600; 2,550 6. If the share of population employed in two countries is the same, average living standards will be higher in the country with: NO the smaller population. the larger population. YES higher average labor productivity. lower average labor productivity. more output. Feedback

For more information, see p. 185 of your textbook. 7. The establishment of well-defined property rights increases: OK average labor productivity. the amount of pollution. the unemployment rate. the quantity of human capital. the labor force participation rate. 8. U.S. productivity growth has rebounded since 1995 largely as a result of: increases in human capital. discoveries of new natural resources. increased political stability. more law and order. OK advances in information and communication technology. 9. Growth in real GDP per capita has: been steady over the course of human history. slowed since the mid-nineteenth century compared to before. OK been more rapid since the mid-nineteenth century than before. increased over the last 150 years only in the United States and Canada. occurred mainly as result of new discoveries of raw materials. 10. The quantity and quality of human capital, physical capital, technology, natural resources, entrepreneurship, and the legal and political environment determine the: unemployment rate. labor force participation rate. real interest rate. share of the population employed. OK average labor productivity. 1. One factor that contributed to the growth in the share of population employed in the United States between 1960 and 2004 was increased: labor union participation. OK female labor force participation. male labor force participation. emigration. minimum wages. 2. To increase future living standards by pursuing higher current rates of investment spending, an economy must: allow higher rates of current consumption. OK reduce current rates of consumption spending. reduce the current capital stock. decrease the amount of future research and development spending. maintain a constant rate of consumption in both the current and future periods. 3. Based on the table below, if the production process described below is subject to diminishing returns to capital, then total packages wrapped when a fourth machine is installed must be less than _____ packages. Number of (Identical) Machines 1 5,000 2 9,000 3 12,000 3,000 4,000 NO 12,000 13,000 Total Packages Wrapped

YES Feedback

15,000

For more information, see p. 191 of your textbook. 4. Long-lived goods used to produce other goods and services are called: financial capital. human capital. OK physical capital. intermediate goods. inventories. 5. Growth of real GDP per person is totally determined by the growth of average: OK labor productivity and the proportion of the population employed. labor productivity and the proportion of the population in the labor force. labor force participation and the share of income going to capital. labor force participation and the share of the population employed. number of employed workers and population. 6. Real GDP per person in both Alpha and Omega equals \$2,000. Over the next 100 years real GDP per person grows at 1 percent annual rate in Alpha and at a 2 percent annual rate in Omega. After 100 years real GDP person in Alpha is _____ smaller than real GDP per person in Omega. NO \$2,000 \$4,540 YES \$9,080 \$12,495 \$15,784 Feedback For more information, see p. 183 of your textbook. Alpha = 2000*(1.01)^100 Omega = 2000*(1.02)^100

7. High rates of saving and investing in the private sector promote economic growth by increasing human capital. YES increasing physical capital. improving technology. NO improving the social and legal environment. increasing the availability of natural resources. Feedback For more information, see p. 200 of your textbook. 8. Entrepreneurs are people who: engage exclusively in business travel. entertain the workers. run businesses on a day-to-day basis. own the physical capital used in production. OK create new economic enterprises. 9. Since 1995 U.S. productivity growth has _____ as a result of _____ investment in information and communication technology. slowed; decreased slowed: increased OK increased; increased increased; decreased

increased; unchanged 10. Over the period from 1870 to 2003, the growth of real per GDP capita tended to be more rapid between _____, particularly for _____. 1870-1950; Japan 1870-1950; the United States 1870-1950; Canada OK 1950-2003; Japan 1950-2003; the United States