Productivity & Growth

The key to increasing real average incomes in a nation lies in:

• Limiting unemployment

• Reducing interest rates

• Increasing productivity

• Increasing exports

A reasonable measure of the average standard of living in a country is:

• Real GDP per capita

• Nominal GDP per capita

• Growth rate of real GDP

• Growth rate of nominal GDP

An economy that accumulates human capital is:

• Hiring more workers

• Increasing the skills of its workforce

• Increasing labour force participation

• Increasing its population

Which of the following describes an increase in technological knowledge?

• A farmer sends his child to agricultural college

• A farmer buys another tractor

• A farmer hires another day workers

• A farmer discovers a new way to water his plants

In order for an economy to increase investment:

• Business must spend less

• Taxes must increase

• Society must save more

• Exports must increase

Diminishing returns to capital means that any given increase in investment leads to:

• The same economic growth in rich and poor countries

• Less economic growth in a poor country than in a rich one

• Less economic growth in a rich country than in a poor one

• None of the above

Which of the following expenditures is likely to result in a positive externality?

• A firm buys a new computer

• Aramco buys new drilling equipment

• Fatimah pays her university tuition

• A farmer buys a new tractor

Which of the following statements on the impact of population growth on productivity is true?

• To date, there is no evidence found to support that population growth limits natural resources

• Rapid population growth may diminish the capital stock

• Rapid population growth may promote technological progress

• All of the above

Which of the following may increase the stock of knowledge in the economy?

• Promoting research and development

• Greater openness to trade

• Higher population growth

• All of the above

To increase growth, governments should do all of the following EXCEPT:

• Attract foreign investment in their country

• Encourage savings and investment

• Promote research and development

• Pursue inward-oriented trade policies