ECON QUIZ-Chapter 11

1. With the amount of labour and other inputs employed held constant, the greater the amount of capital already in use, the less an additional unit of capital adds to production is a general principle of economics called: diminishing returns to capital2. The growth of real GDP per person in Australia between 1964 and 2000 was the result of: growth in both average labour productivity and the share of population employed3. An incentive system facilitates economic growth by:rewarding people for specialising in activities in which they have a comparative advantage4. Growth of real GDP per person is totally determined by the growth of average:labour productivity and the proportion of the population employed5. Countries with small amounts of capital per worker tend to have ______ levels of real GDP per person and ___ levels of average labour productivity.l ow; low6. Additional economic growth (study of long-run forces that affect potential output) should be pursued when:the marginal costs of growth are less than the marginal benefi t s7. Most economists would probably agree that new technologies are the single most important source of productivity improvement, hence of __________ in general.economic growth8. Three workers run a house-painting business and always work the same number of hours together. Each can paint 200 square metres per hour using a roller or 80 square metres per hour using a brush. As they move from using only brushes to 1, 2, 3 and 4 rollers, their average labour productivity per hour as a team:increases at a decreasing rate9. Based on the table below, if the production process is subject to diminishing returns to capital, then total packages wrapped when a fourth machine is installed must be less than10. The fact that a higher standard of living tomorrow can only be achieved by sacrificing consumption today is an illustration of the: scarcity principle11. Most countries provide their citizens with free public education through high school because: t he demand curve for education does not include all the social benefits of education12. One of the key factors determining average labour productivity in a country is:the skills and training of workers, called human capi t al13. A n example of a government policy to provide a framework within which the private sector can operate productively is:establishing well defined property rights14. when you are 21, you put $1000 in a bank deposit promising to pay 6% annual compound interest, how much will be in the account 45 years later, when you retire at age 66?$13 765(1000 x (1.06)^45)15. In Macroland, 500 000 of the 1 million people in the country are employed. Average labour productivity in Macroland is $20 000 per worker. Real GDP per person in Macroland totals: 10 000(500000/1000000 x 20000)16. The more certain and well defined private property rights are:the more investment in new capital there will be17. Small differences in growth rates of real GDP per person over the long run make __ very large____ differences in the average standard of living.18. Most economists would probably agree that new technologies are the single most important source of productivity improvement, hence of __________ in general. economic growth19. If people specialise in activities in which they have a comparative advantage, they: can acquire goods and services at the lowest possible cost20. Real GDP per person in Canada was $7377 in 1950. Over the next 48 years it grew at a compound annual rate of 2.0%. If, however, real GDP per person had grown at an average compound annual rate of 2.5%, then real GDP per capita in Canada in 1998 would have been approximately ______ larger. 505021. The key indicator of a country's living standard and economic wellbeing is: real GDP per person22. A variety of policies exist that may help to promote economic growth. These policiesare linked in the sense that they attempt to raise the level of:averagelabour productivity23. The key variable in determining changes in a country's standard of living is the: long-run rate of economic growth24. Most economists agree that ______ are the single most important source of productivity improvements. Technological advances25. Over the period from 1950 to 2000, which country experienced the fastest average annual growth rate of real GDP per person? Japan*26. Increasing the capital available to the workforce, holding other factors constant, tends to______ total output at a(n) ______ rate.Increase; decreasing27. The principle that if the amount of labour and other inputs is held constant, then the greater the amount of capital in use, the less an additional unit of capital adds to production is called the principle of：diminishing returns to capital28. The payment of interest not only on the original deposit, but on all previously accumulated interest, is called:compound interest29. The long-run average annual growth of real GDP per capita in Australia is approximately 1％30. The principal economic cost of growth is：consumption sacrificed for capital formation31. Because of diminishing returns to capital, additions to or improvement in ______ are not the most effective way to increase average labour productivity.physical capital32. Long-lived goods used to produce other goods and services are called: physical capital33. Bank C promises to pay a compound annual interest rate of 6%, while Bank S pays a8% simple annual interest rate on deposits. If you deposit $1000 in each bank, after 10 years your deposit in Bank C equals _____, while your deposit in Bank S equals ______.$1791; $1800Compound interest: (1000x(1.06)^10)=1791Simple interest: (1000 x 0.08) x 10+1000=1800Bank C promises to pay a compound annual interest rate of 6%, while Bank S pays a 10% simple annual interest rate on deposits. If you deposit $1000 in each bank, after 10 years your deposit in Bank C equals __and deposit in Bank S equals __.Compound interest: 1000 x (1.06)^10=$1791Simple interest: (1000 x 0.10) x 10 +1000=$2000Small differences in annual growth rates of real GDP generate large differences in real GDP over time because of the: power of compound interest.34. The rate of growth in real GDP per person in the United States, Japan, Canada, Australia and the major European economies was highest during the period of:1960-197335. One specific function of government that appears to be crucial to economic success is the establishment of: well defined policy rights36. Overall productivity increasing when producers concentrate on those activities at which they are relatively most efficient is the principle of: Competitive advantages37. Countries lacking abundant natural resources within their borders _______ economic growth. can achieve substantial rates of*38. Assume that the share of population employed in all countries is 50%. Based on the information below, which country has the highest real GDP per capita? Country E*39. Real GDP per person in Australia was $5626 in 1870. Over the next 130 years, it grew at a compound annual rate of 1.145%. If, however, real GDP per person had grown at an averagecompound rate of 1.5%, then real GDP per person in Australia in 2000 would have been approximately:$38 97540. Which of the following will NOT lead to increased capital investment within a country? Increased uncertainty about private property rights41. The population of Alpha totals one million people, of whom 40% are employed. Average output per worker in Alpha is $20 000. Real GDP per person in Alpha totals: 800042. Jim and Fred are the only two cashiers employed at a retail store. Each of them works the same 40 hours per week and each can check out 30 customers per hour by manually entering the price of each product purchased into the cash register. The store owner replaces the old cash registers with new ones that automatically scan product prices into the register. With the new register, Jim and Fred can each check out 60 customers per hour. Their average labour productivity as a team before the new cash registers were introduced was “30” customers per hour and after the new machines were installed increased to “60” customers per hour.43. An example of a government policy to provide a framework within which the private sector can operate productively is: establishing well defined property rights44. If an economy maintains a small rate of growth for a long period of time, then the size of the economy: can increase by a large amount** 1870,Australia’s per capita GDP exceeded that of the United States and has since gro wn on average at a lower rate**More than 50% of countries have real per capita GDP of less than US$900045. Compared with the level of real GDP per person in 1870, by 2000, real GDP in the United States was “11” times larger, while real GDP per person in Japan was “25x larger”.。