Macroeconomics Practice Problem Set - Chapter 12

Although growth rates across countries vary some, rankings of countries by income remain pretty much the same over time.

• True

• False

If a country has a higher level of productivity than another, then it also has a higher level of real GDP.

• True

• False

If Country A produces 7,000 units of goods and services using 700 hours of labor, and if Country B produces 5,500 units of goods and services using 500 units of labor, then productivity is lower in Country A than in Country B.

• True

• False

Like physical capital, human capital is a produced factor of production.

• True

• False

As capital per worker rises, output per worker rises. However, this increase in output per worker is smaller at smaller levels of existing capital per worker.

• True

• False

The catch-up effect refers to the idea that poor countries, despite their best efforts, are not likely ever to experience the economic growth rates of wealthier countries.

• True

• False

If your company opens and operates a branch in a foreign country, your company engages in foreign direct investment.

• True

• False

Foreign direct investment and domestic investment have the same effect on all measures of economic prosperity.

• True

• False

A country that made its courts less corrupt and its government more stable would likely see its standard of living rise.

• True

• False

One reason that governments may find it useful to sponsor universities and basic research is that to a large extent knowledge is generally a private good.

• True

• False