The 'WHAT goods and services does the US produce' question can best be answered using data about which of the following?

Productivity

Multiple Choice
Rises when the ratio of output to input increases.
Falls when factors of production cost more.
Rises when the value of output rises relative to the cost of inputs.
Falls when the value of output rises relative to the cost of inputs.
Answer
Rises when the ratio of output to input increases.
Explanation
The amount we can produce with our inputs in a given time frame is what productivity is measuring. It measures how much output can be produced with a certain amount of inputs.

Whenever technology advances, an economy can produce more output with

Multiple Choice
Fewer resources.
No resources.
More resources.
Current resources.
Answer
Current resources.
Explanation
Technological advances are one of the forces that keeps shifting resources from one industry to another; shifting the production possibilities curve outward.

Outsourcing leads to

Multiple Choice
Increases in productivity and increases in total output.
Increases in productivity and decreases in total output.
Decreases in productivity and decreases in total output.
Decreases in productivity and increases in total output.
Answer
Increases in productivity and increases in total output.
Explanation
Outsourcing allows U.S workers to pursue their comparative advantage, leading to an increase in productivity and total output capabilities which increases living standards.

Which of the following is an indicator of how much output the average person would get if all output were divided up evenly among the population?

Multiple Choice
Economic growth.
GDP.
Per capita GDP.
Real GDP.
Answer
Per capita GDP.
Explanation
Per capita GDP is an important measure of living standards.

The government establishes the rules of the game for economic transactions in order to

Multiple Choice
Encourage spillover costs.
Legitimatize and enforce contracts.
Discourage the ownership of property.
Discourage the production of capital.
Answer
Legitimatize and enforce contracts.
Explanation
Without guarantees from both buyer and seller as established in contracts, many market activities would cease to exist, thereby harming the economy.

Per capita GDP will rise if GDP

Multiple Choice
Increases more slowly than the population increases.
Increases more rapidly than the population increases.
Decreases and the population increases.
Increases at the same rate as the population increases.
Answer
Increases more rapidly than the population increases.
Explanation
As long as the growth in GDP outpaces population growth, living standards will rise.

Per capita GDP will definitely rise if

Multiple Choice
The rate of economic growth is less than the rate of population growth.
There is a decrease in the size of the working population.
The population falls and GDP does not fall.
The rate of economic growth falls.
Answer
The population falls and GDP does not fall.
Explanation
Low population growth rates coupled with higher rates of economic growth make per capita GDP rise.

Which of the following does not contribute to the high productivity of the U.S. economy?

Multiple Choice
Negative externalities.
The capital stock.
Factor mobility.
Technology.
Answer
Negative externalities.
Explanation
Negative externalities make the internal costs inexpensive in the short run, but cause higher 'fix-it' costs in the long run. Positive externalities usually created by government technology spillovers help productivity in the long run.

Differences in size of real GDP across countries are best explained by

Multiple Choice

Population growth.
Human capital.
Large farming sector.
None of the choices are correct.
Answer
Human capital.
Explanation
Real GDP growth is determined not by quantity of factors of production but by quality of factors of production such as human capital.

The 'WHAT goods and services does the US produce' question can best be answered using data about which of the following?

Multiple Choice
Per capita GDP.
The distribution of output in markets, specifically among manufacturing, services, and agricultural sectors.
The distribution of GDP among different income quintiles.
Productivity.
Answer
The distribution of output in markets, specifically among manufacturing, services, and agricultural sectors.
Explanation
Markets tell producers what the economy should produce. The composition of GDP and output reflects what country is producing.