,Chapter 1—Economic Growth: An Introduction to Scarcity and Choice
TRUE/FALSE
1. Since 1977, the growth rate of per capita GDP in the U.S. has been lower than it
was in previous
periods.
ANS: T
PTS: 1
2. The four primary resources are land, labor, capital, and entrepreneurship.
ANS: T
PTS: 1
3. The production possibilities curve shows the maximum combinations of goods and
services that can be
produced by an economy when unemployment is below the natural rate.
ANS: F
PTS: 1
4. All points on or below the production possibilities curve are attainable.
ANS: T
PTS: 1
5. The economic decisions that influence growth are those that increase capital and
improve technology.
ANS: T
PTS: 1
6. It pays to increase the production of capital goods if the marginal cost of the
production decision
exceeds the marginal benefit.
ANS: F
PTS: 1
7. It is always better for the economy to experience economic growth.
ANS: F
PTS: 1
8. As resources are transferred from production of trucks to the production of
computers, marginal cost
of computers decreases.
ANS: F
PTS: 1
9. Technological improvement allows more output to be obtained from a given level
of inputs, thereby
shifting the production possibilities curve to the right.
ANS: T
PTS: 1
10. The decline in the growth of capital intensity in the United States has been
,caused largely by a rapid
increase in labor inputs in addition to slow growth in capital inputs.
ANS: T
PTS: 1
11. The best combination of goods and services is being produced when marginal cost
and marginal
benefit are equal.
1
, ANS: T
PTS: 1
12. Increases in resources, technological improvement, and efficiency improvement
are all potential
sources of economic growth.
ANS: T
PTS: 1
13. Growth based on capital accumulation can be more costly than growth based on
efficiency
improvement.
ANS: T
PTS: 1
14. The growth of labor productivity is caused by the growth of capital relative to
labor and by
technological and efficiency improvements.
ANS: T
PTS: 1
15. Rebuilding a destroyed property will create jobs and income, but it will not
create new output.
ANS: T
PTS: 1
16. At one time, productivity per hour in Japan was almost twice as large as
productivity per hour in the
United States.
ANS: F
PTS: 1
17. Long term growth occurs if an economy increases its production possibilities.
ANS: T
PTS: 1
18. An axiom of economics is that the resources required to produce goods and
services are scarce relative
to people’s aggregate needs for goods and services.
ANS: F
PTS: 1
19. According to Gwartney, economic freedom causes prosperity
ANS: F
PTS: 1
20. Creative destruction leads to a decrease in economic growth
ANS: F
PTS: 1
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