Productivity Quiz

Historically, the rate of real per capita GNP/GDP growth in the U.S. has:

• averaged about 2% per year over the last century.
• consistently exceeded that of every nation but Japan.
• steadily increased during each decade from 1870 to 1980.
• accelerated markedly since 1950, thanks to modern technology.

According to the economic analyst Edward Denison, the most important source of growth in the U.S. for the period 1929 to 1957 was:

• increase in population.
• improved education and training.
• improved technology.
• increased capital investment.

Generally, in the field of technology, the U.S. has been:

• a world leader for much of its history.
• a step behind most European nations, even in recent years.
• ahead of Europe, but far behind Japan.
• a leader in science, but not in manufacturing.

Q. B. Jones is president of Medigadgets, Inc., a manufacturing firm specializing in equipment and supplies for the medical field. Jones works hard to attract investors for Medigadgets, and about 10% of the firm’s gross is reinvested. Jones’s rationale is that such investment is essential to high productivity. “Our people have the very latest equipment to work with,” says Jones. “We are light years ahead of our nearest competitors.” Jones’s perspective in this case is PROBABLY:

• accurate, since capital formation through investment has been a major contributor to economic growth in the U.S.
• questionable since research shows most investment goes to support R and D, not to create new capital.
• justified only if the private investors are realizing a profit comparable to that of Medigadgets.
• faulty since too much investment in capital invariably depletes resources that could be used in other ways.

Which of the following is among the MOST SiGNIFICANT reasons cited for the productivity slowdown in the U.S.?

• A value system that censures a materialistic philosophy.
• An unchecked rate of growth in the capital-labor ratio.
• Changes in the composition of the labor force.
• Depletion of natural resources.

Economists worry about a slowdown in productivity for two MAIN reasons. One is the potential decline in technological change that could affect our future rate of growth. And the other is:

• loss of our ability to diversify in manufacturing.
• increased dependence on imported raw materials.
• decline in service industries that depend on microelectronics technology.
• concern over the risk of higher inflation rates.