1066 ? Chapter 25/Production and Growth
136. An increase in the saving rate would, other things the same,
a. increase growth more for a poor country than a rich country, and raise growth permanently. b. increase growth more for a poor country than a rich country, but raise growth temporarily. c. increase growth more for a rich country than a poor country, and raise growth permanently. d. increase growth more for a rich country than a poor country, but raise growth temporarily. ANS: B PTS: 1 DIF: 3 REF: 25-3 TOP: Catch-up effect MSC: Analytical
137. The traditional view of the production process is that capital is subject to
a. diminishing returns, so that other things the same real GDP in poor countries should grow at a faster rate than in
rich countries.
b. diminishing returns, so that other things the same real GDP in poor countries should grow at a slower rate than in
rich countries.
c. increasing returns, so that other things the same real GDP in poor countries should grow at a faster rate than in
rich countries.
d. increasing returns, so that other things the same real GDP in poor countries should grow at a slower rate than in
rich countries.
ANS: A PTS: 1 DIF: 2 REF: 25-3 TOP: Catch-up effect | Diminishing returns MSC: Analytical 138. The traditional view that the production process has diminishing returns implies that
a. the increase in output growth from an increase in the saving rate rises over time, and that, other things the same,
rich countries should grow faster than poor ones.
b. the increase in output growth from an increase in the saving rate falls over time, and that, other things the same,
rich countries should grow faster than poor one