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162. According to research by Robert Fogel, what proportion of the British population in 1780 was so malnourished that

they could not perform manual labor? a. 40% b. 20% c. 10% d. 5% ANS: B PTS: 1 DIF: 1 REF: 25-3 TOP: Health and nutirition MSC: Definitional 163. Roughly what percentage of growth in real GDP per person in Britain between 1790 and 1980 was accounted for by

improved nutrition according to the estimates of Robert Fogel? a. 60% b. 45% c. 30% d. 15% ANS: C PTS: 1 DIF: 1 REF: 25-3 TOP: Health and nutirition MSC: Definitional 164. Which of the following is correct?

a. In an economy-wide sense property rights are an important prerequisite for the price system to work. b. Property rights give people the ability to exercise authority over the resources they own.

c. An absence of well-established and well-enforced property rights appears to associated with a reduced standard

of living.

d. All of the above are correct. ANS: D PTS: 1 DIF: 1 REF: 25-3 TOP: Property rights MSC: Definitional 165. The dictator of Turan has recently begun to arbitrarily seize farms belonging to his political opponents, and he has

given the farms to his friends. His friends don't know much about farming. The courts in Turan have ruled that the seizures are illegal, but the dictator has ignored the rulings. Other things equal, we would expect that the growth rate in Turan will

a. fall temporarily, but will return to where it was when the new owners learn how to farm.

b. increase because the total amount of human capital in the country will increase as the new owners learn how to

farm.

c. fall and remain lower for a long time.

d. not be affected unless widespread civil disorder or civil war results. ANS: C PTS: 1 DIF: 3 REF: 25-3 TOP: Political stability MSC: Analytical 166. The dictator of a certain country requires that companies planning to open or expand must pay a large fee to file an

application one year prior to plans to build new factories or expand existing ones. Other things the same, in the long run this requirement would

a. reduce real GDP per person and productivity. b. reduce real GDP per person but not productivity. c. reduce productivity but not real GDP per person. d. None of the above is correct. ANS: A PTS: 1 DIF: 2 REF: 25-3 TOP: Property rights MSC: Applicative 167. Suppose that a new government is elected in Tempestia. The new government takes steps toward improving the court

system and reducing government corruption. The citizens of Tempestia find these efforts credible and outsiders believe these changes will be effective and long lasting. These changes will probably a. raise real GDP per person and productivity in Tempestia. b. raise real GDP per person but not productivity in Tempestia. c. raise productivity but not real GDP per person in Tempestia. d. raise neither productivity nor real GDP per person in Tempestia. ANS: A PTS: 1 DIF: 2 REF: 25-3 TOP: Property rights MSC: Applicative

Chapter 25/Production and Growth ? 1071

168. Inward-oriented policies

a. include imposing tariffs and other trade restrictions.

b. have generally increased productivity and growth in the countries that pursued them. c. promote the production of goods and services the country produce most efficiently. d. All of the above are correct. ANS: A PTS: 1 DIF: 1 REF: 25-3 TOP: Trade policy MSC: Definitional 169. Inward-oriented policies

a. are generally supported by economists.

b. are primarily concerned with the development of human capital. c. in some ways are like prohibiting the use of certain technologies. d. All of the above are correct. ANS: C PTS: 1 DIF: 1 REF: 25-3 TOP: Trade policy MSC: Definitional

170. The President of a developing country proposes that his country needs to help domestic firms by imposing trade

restrictions.

a. These are outward-oriented policies and most economists believe they would have beneficial effects on growth. b. These are outward-oriented policies and most economists believe they would have adverse effects on growth. c. These are inward-oriented policies and most economists believe they would have beneficial effects on growth. d. These are inward-oriented policies and most economists believe they would have adverse effects on growth. ANS: D PTS: 1 DIF: 2 REF: 25-3 TOP: Trade policy MSC: Applicative 171. In the past there have been violent protests against the World Bank and the World Trade Organization. The protesters

argued that these institutions promote free trade and also encourage corporations in rich countries to invest in poor countries. The protesters contended that these practices make rich countries richer and poor countries poorer. An economist would

a. disagree with the protesters because these practices will help make both rich and poor countries richer.

b. disagree with the protesters about free trade, but would agree with the protesters about corporate investment. c. disagree with the protesters about corporate investment, but would agree with the protesters about free trade. d. agree with the protesters. ANS: A PTS: 1 DIF: 2 REF: 25-3 TOP: Trade policy MSC: Applicative 172. Outward-oriented policies

a. prevent countries from taking advantage of gains from trade.

b. have generally led to high growth for the countries that pursued them. c. receive little support from economists, despite such polices success. d. None of the above is correct. ANS: B PTS: 1 DIF: 2 REF: 25-3 TOP: Trade policy MSC: Definitional

173. When a country removes trade barriers and imports toys and exports farm machinery,

a. its growth slows.

b. its productivity decreases.

c. it is essentially transforming farm machinery into toys.

d. its economic well-being decreases while that of the country that sells toys increases. ANS: C PTS: 1 DIF: 2 REF: 25-3 TOP: Trade policy MSC: Applicative 174. Suppose a country reduces trade restrictions. This country would be pursing an

a. inward policy, which most economists believe has beneficial effects on the economy. b. inward policy, which most economists believe has adverse effects on the economy. c. outward policy, which most economists believe has beneficial effects on the economy. d. outward policy, which most economists believe has adverse effects on the economy. ANS: C PTS: 1 DIF: 1 REF: 25-3 TOP: Free trade MSC: Definitional

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175. Presidents of the African countries of Mali and Burkina Faso were particularly concerned with subsidies richer

countries provide for domestic production of a. oil.

b. tobacco. c. gold. d. cotton. ANS: D PTS: 1 DIF: 1 REF: 25-3 TOP: Free trade MSC: Definitional

176. In 2003 The Presidents of the African countries of Mali and Burkina Faso

a. requested that rich countries apply free trade rules to those products where poor countries have a proven

competitive advantage.

b. argued that free trade was not a policy that developing nations would find it wise to follow.

c. said that at their current stage of development that most of the principles of market economies were not practical. d. None of the above is correct. ANS: A PTS: 1 DIF: 1 REF: 25-3 TOP: Free trade MSC: Definitional

177. National defense and knowledge are generally considered to be

a. private goods. b. public goods. c. proprietary goods. d. societal goods. ANS: B PTS: 1 DIF: 1 REF: 25-3 TOP: Public goodss MSC: Definitional 178. Patents turn new ideas into

a. public goods, and increase the incentive to engage in research. b. public goods, but decrease the incentive to engage in research. c. private goods, and increase the incentive to engage in research. d. private goods, but decrease the incentive to engage in research. ANS: C PTS: 1 DIF: 1 REF: 25-3 TOP: Patents | Private goods MSC: Interpretive 179. Once an idea enters society's pool of knowledge, the knowledge becomes a

a. societal good. b. private good. c. public good. d. proprietary good. ANS: C PTS: 1 DIF: 1 REF: 25-3 TOP: Public goods MSC: Definitional

180. In medieval Europe an important technological advance was the use of the padded horse collar for plowing. Once this

idea was thought of, other people used it. This illustrates that knowledge is generally a a. public good. b. societal good. c. private good. d. normal good. ANS: A PTS: 1 DIF: 1 REF: 25-3 TOP: Public goods MSC: Applicative 181. Drug companies can usually obtain patents on new drugs. This turns new ideas into

a. private goods, and increase the incentive to engage in research. b. private goods, but decrease the incentive to engage in research. c. public goods, and increase the incentive to engage in research. d. public goods, and decrease the incentive to engage in research. ANS: A PTS: 1 DIF: 1 REF: 25-3 TOP: Patents | Private goods MSC: Applicative

Chapter 25/Production and Growth ? 1073

182. Malthus predicted that the power of population

a. was greater than the power of the earth to produce subsistence. His forecast was on the mark. b. was greater than the power of the earth to produce subsistence. His forecast was off the mark. c. was less than the power of the earth to produce subsistence. His forecast was on the mark. d. was less than the power of the earth to produce subsistence. His forecast was off the mark. ANS: B PTS: 1 DIF: 1 REF: 25-3 TOP: Malthus | Population MSC: Definitional 183. A rapid increase in the number of workers, other things the same, is likely in the short term to

a. raise real GDP per person, but decrease real GDP. b. decrease both real GDP and real GDP per person. c. raise both real GDP and real GDP per person. d. raise real GDP, but decrease real GDP per person. ANS: D PTS: 1 DIF: 1 REF: 25-3 TOP: Population MSC: Interpretive

184. Which of the following is not correct?

a. China allows only one child per family and couples that violate this rule are subject to substantial fines. b. In developed countries, population growth is 3 percent; in many developing countries it is 5 percent. c. Educational attainment tends to be lowest in countries with the highest population growth.

d. Economists generally believe that a country that decreases a high population growth rate can increase its

economic growth rate.

ANS: B PTS: 1 DIF: 1 REF: 25-3 TOP: Growth policy MSC: Interpretive 185. Which of the following countries achieved higher economic growth, in part by mandating a reduction in population

growth?

a. Great Britain b. China c. Australia d. France ANS: B PTS: 1 DIF: 2 REF: 25-3 TOP: Population MSC: Definitional

186. Which of the following is an observation made by Kremer?

a. World growth rates increased as the population increased.

b. Technological progress allows for increasing population because of advances in agriculture.

c. World population is growing so rapidly that soon it will outstrip natural resources and our standard of living will

decline.

d. All of the above are observations made by Kermer. ANS: A PTS: 1 DIF: 1 REF: 25-3 TOP: Population MSC: Definitional

187. Which of the following is correct?

a. If developing countries limit career and educational opportunities for women, birth rates are likely to be lower. b. Growth rates in developed and developing countries are nearly the same.

c. Historically, in periods where the rate of population growth was high, so was the rate of growth in world real

GDP per person.

d. None of the above is correct. ANS: C PTS: 1 DIF: 2 REF: 25-3 TOP: Population MSC: Definitional