21.Allelseequal,iftherearediminishingreturnsandconstantreturnstoscale,thenwhathappenstoproductivityifcapitalandlaborbothincreasebutcapitalincreasesbymore?
a.Productivitywilldefinitelyfall.
b.Productivitywilldefinitelybeunchanged.
c.Productivitywilldefinitelyrise.
d.Noneoftheabovearenecessarilycorrect.
22.Theslopeoftheproductionfunctionwithcapitalperworkeronthehorizontalaxisandoutputperworkerontheverticalaxis
a.ispositiveandgetssteeperascapitalperworkerrises.
b.ispositiveandgetsflatterascapitalperworkerrises.
c.isnegativeandgetssteeperascapitalperworkerrises.
d.isnegativeandgetsflatterascapitalperworkerrises.
Figure25-1.
Onthehorizontalaxis,K/Lrepresentscapital(K)perworker(L).Ontheverticalaxis,Y/Lrepresentsoutput(Y)perworker(L).
23.RefertoFigure25-1.Thecurvebecomesflatterastheamountofcapitalperworkerincreasesbecauseof
a.increasingreturnstocapital.
b.increasingreturnstolabor.
c.diminishingreturnstocapital.
d.diminishingreturnstolabor.
24.RefertoFigure25-1.Theshapeofthecurveisconsistentwithwhichofthefollowingstatementsabouttheeconomytowhichthecurveapplies?
a.Inthelongrun,ahighersavingrateleadstoahigherlevelofproductivity.
b.Inthelongrun,ahighersavingrateleadstoahigherlevelofincome.
c.Inthelongrun,ahighersavingrateleadstoneitherahighergrowthrateofproductivitynorahighergrowthrateofincome.
d.Alloftheabovearecorrect.
25.RefertoFigure25-1.Theshapeofthecurveisconsistentwithwhichofthefollowingstatementsabouttheeconomytowhichthecurveapplies?
a.Inthelongrun,ahighersavingrateleadstoahighergrowthrateofproductivity.
b.Inthelongrun,ahighersavingrateleadstoahighergrowthrateofincome.
c.Returnstocapitalbecomeincreasinglysmallerastheamountofcapitalperworkerincreases.
d.Alloftheabovearecorrect.
26.RefertoFigure25-1.ChooseapointanywhereonthecurveandcallitpointA.IftheeconomyisatpointAin2011,thenitwilldefinitelyremain atpointAin2012if,between2011and2012,
a.thequantityofphysicalcapitalremainsconstant;thenumberofworkersdoubles;andhumancapital,naturalresources,andtechnologyalldoubleaswell.
b.thequantityofphysicalcapitaldoubles;humancapital,naturalresources,andtechnologyalldoubleaswell;andthenumberofworkersremainsconstant.
c.thequantityofphysicalcapitaldoubles;thenumberofworkersdoubles;andhumancapital,naturalresources,andtechnologyalldoubleaswell.
d.thequantityofphysicalcapitaldoubles;thenumberofworkersdoubles;andhumancapital,naturalresources,andtechnologyremainconstant.
27.Otherthingsthesame,acountrythatincreasesitssavingrateincreases
a.itsfutureproductivityandfuturerealGDP.
b.neitheritsfutureproductivitynorfuturerealGDP.
c.itsfutureproductivity,butnotitsfuturerealGDP.
d.itsfuturerealGDP,butnotitsfutureproductivity.
28.Ifacountry’ssavingrateincreases,theninthelongrun
a.productivityishigherbutrealGDPperpersonisnothigher.
b.realGDPperpersonishigherbutproductivityisnothigher.
c.productivityandrealGDPperpersonarebothhigher.
d.neitherproductivitynorrealGDPperpersonishigher.
29.Otherthingsthesame,acountrythatincreasesitssavingsratewillhave
a.higherfuturecapitalandhigherfuturerealGDPperperson.
b.higherfuturecapitalbutnothigherfuturerealGDPperperson.
c.higherfuturerealGDPperpersonbutnothigherfuturecapital.
d.neitherhigherfuturecapitalnorhigherfuturerealGDPperperson.
30.CurrentlyacountryhasrealGDPperpersonof500.Raisingcapitalperworkerbyonewouldincreaseoutputperworkerby4.Otherthingsthesame,whichofthefollowinglong-runcombinationsareconsistentwiththeeffectsofthiscountryincreasingitssavingrate?
a.realGDPperpersonis520andraisingcapitalperworkerbyonewouldincreaseoutputperworkerby3
b.realGDPperpersonis520andraisingcapitalperworkerbyonewouldincreaseoutputperworkerby5
c.realGDPperpersonis480andraisingcapitalperworkerbyonewouldincreaseoutputperworkerby3
d.realGDPperpersonis480andraisingcapitalperworkerbyonewouldincreaseoutputperworkerby5
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