Chapter 13 Why Do Economies Grow?

| November 9, 2018

13)
Net investment plus depreciation is equal to
A)
gross depreciation.
B)
gross domestic product.
C)
gross exports.
D)
gross investment.

14)
The stock of capital ________ with any gross investment and ________ with any
depreciation.
A)
increases; increases
B)
increases; decreases
C)
decreases; increases
D)
decreases; decreases

15)
To determine the change in the capital stock, the level of new investment must
be adjusted for depreciation because some new investment
A)
is not used immediately.
B)
merely replaces existing, but worn out, capital.
C)
replaces existing workers.
D)
is more efficient than existing capital.

16)
As the stock of capital grows, there will typically be ________ depreciation.
A)
less
B)
more
C)
the same amount of
D)
no

17)
Increases in net investment generally result in
A)
lower levels of capital stock and lower levels of depreciation.
B)
lower levels of capital stock and higher levels of depreciation.
C)
higher levels of capital stock and higher levels of depreciation.
D)
higher levels of capital stock and lower levels of depreciation.

18)
In the short run, if the stock of capital ________ there will be more
depreciation.
A)
grows
B)
declines
C)
remains stable
D)
grows, declines, or remains stable

19)
The factor that ultimately determines the change in the stock of capital, the
level of real wages, and the output of an economy is
A)
the labor force.
B)
net investment.
C)
the unemployment level.
D)
GDP.

20)
Suppose that for a given firm, the increase in output resulting from the last
worker hired is less than the increase in output of the previous worker hired.
This is an example of
A)
diminishing returns.
B)
constant returns.
C)
increasing return.
D)
capital deepening.

21)
If the stock of capital of a nation is ________ while the population ________,
the nation can produce more output, but output per worker falls.
A)
fixed; decreases
B)
declining; decreases
C)
fixed; increases
D)
fixed; remains stable

22)
Which of the following uses of tax revenues collected by the government leads
to increased capital deepening?
A)
building roads
B)
increased foreign aid
C)
Medicare payments
D)
Social Security payments

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