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File: Chapter 014 Economic Growth, Productivity, and Living Standards
Multiple Choice
1. The key indicator of a country's living standard and economic well-being is:
A. the interest rate.
B. nominal GDP per person.
C. real GDP.
D. real GDP per person.
Answer: D
Difficulty: 01 Easy
Topic: The Remarkable Rise in Living Standards: The Record
AACSB: Reflective Thinking
Blooms: Remember
Learning Objective: 14-01
Feedback: Real GDP per capita indicates how much the average person produces and thus, how
much goods and services are available to the typical person.
2. Compared to the level of real GDP per person in 1870, by 2010, real GDP in the U.S was
______ times larger, while real GDP per person in Japan was _______.
A. 12; smaller
B. 12; 12 times larger
C. 12; 30 times larger
D. 30; 12 times larger
Answer: C
Difficulty: 01 Easy
Blooms: Remember
Feedback: U.S. real GDP per person went up enormously from 1870 to 2010, and especially fast
in the years 1950 to 2010. In Japan, real GDP per person started out much lower than the U.S. in
1870 and grew 30 times over the same interval.
3. Over the period from 1870 to 2010, the growth of real GDP per capita tended to be more rapid
between _____, particularly for _____.
A. 1870-1950; Japan
B. 1870-1950; the United States
C. 1870-1950; Canada
D. 1950-2010; Japan
Answer: D
1
© 2017 by McGraw-Hill Education. This is proprietary material solely for authorized instructor use. Not authorized for sale or distribution in any
manner. This document may not be copied, scanned, duplicated, forwarded, distributed, or posted on a website, in whole or part.
Difficulty: 01 Easy
Blooms: Remember
Feedback: U.S. real GDP per person went up enormously from 1870 to 2010, and especially fast
in the years 1950 to 2010. In Japan, real GDP per person started out much lower than the U.S. in
1870 and grew 30 times over the same interval.
4. Over the period from 1950 to 2010, which country experienced the fastest average annual
growth rate of real GDP per person?
A. United States
B. Japan
C. China
D. Canada
Answer: C
Difficulty: 01 Easy
Blooms: Remember
Feedback: China, partially due to expanded use of markets since the 1990s, showed the fastest
rate of growth of the countries listed over the period 1950-2010.
5. Growth in real GDP per capita has:

A. been steady over the course of human history.
B. slowed since the mid-nineteenth century compared to before.
C. been more rapid since the mid-nineteenth century than ever before.
D. increased over the last 150 years only in the United States and Canada.
Answer: C
Difficulty: 01 Easy
Blooms: Remember
Feedback: Since the Industrial Revolution, growth in real GDP per capita has expanded at rates
faster than at any other time in history.
6. The rise in average living standards experienced by most industrialized countries:

A. has been continuous over the course of human history.
B. was more rapid before 1870 than after 1870.
C. has been more rapid since 1950 than before 1950.
D. has resulted primarily from an increase in population worldwide.
2
Answer: C
Difficulty: 01 Easy
Blooms: Remember
Feedback: In the post-WWII period, standards of living have growth quickly in most
industrialized countries.
7. The long-run average annual growth of real GDP per person is the United States is
approximately ______ percent.
A. one
B. two
C. five
D. seven
Answer: B
Difficulty: 01 Easy
Blooms: Remember
Feedback: Real GDP per person has grown at an average annual rate of about two percent, which
means that standard of living doubles every 36 years.
8. Compound interest is:

A. the payment of interest on the original deposit.
B. the interest rate adjusted for the rate of inflation.
C. the real rate of interest compounded by the rate of inflation.
D. the payment of interest on both the original deposit and all accumulated interest.
Answer: D
Difficulty: 01 Easy
Blooms: Remember
Feedback: Compound interest is the payment of interest on both the original deposit and all
accumulated interest.
3
9. Bank C promises to pay a compound annual interest rate of 6 percent, while Bank S pays a 10
percent simple annual interest rate on deposits. If you deposit $1,000 in each bank, after 10
years, your deposit in Bank C equals _____, while your deposit in Bank S equals ______.
A. $1,060; $1,100
B. $1,600; $2,000
C. $1,600; $2,594
D. $1,791; $2,000
Answer: D
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: Bank C uses the formula: FV = PV (1 + i)n, where i is the interest rate and n the
number of years, so that your deposit after 10 years = $1,000 × (1.06)10 = $1,791. Bank S uses
the formula: FV = P + I, where I is the sum of all the interest payments (here 10 times $100), so
that our deposit after 10 years = $1,000 + $1,000 = $2,000.
10. Bank C promises to pay a compound annual interest rate of 6 percent, while Bank S pays an
8 percent simple annual interest rate on deposits. If you deposit $1,000 in each bank, after 10
years, your deposit in Bank C equals _____, while your deposit in Bank S equals ______.
A. $1,060; $1,800
B. $1,600; $1,800
C. $1,600; $2,159
D. $1,791; $1,800
Answer: D
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: Bank C uses the formula: FV = PV (1 + i)n, where i is the interest rate and n the
number of years, so that your deposit after 10 years = $1,000 × (1.06)10 = $1,791. Bank S uses
the formula: FV = P + I, where I is the sum of all the interest payments (here 10 times $100), so
that our deposit after 10 years = $1,000 + $800 = $1,800.
11. If you left $2,500 on deposit with a bank promising to pay you a 6 percent compound annual
rate of interest, then after 50 years your deposit would be worth approximately:
A. $2,800
B. $18,420
C. $46,050
D. $250,750
Answer: C
Difficulty: 03 Hard
4
AACSB: Analytic
Blooms: Apply
Feedback: Use the formula FV = PV (1 + i)n, where i is the interest rate and n the number of
years, so that your deposit after 50 years = and $2,500 × (1.06)50 = $46,050.
12. If you left $2,500 on deposit with a bank promising to pay you a 5 percent compound annual
rate of interest, then after 50 years your deposit would be worth approximately:
A. $2,625
B. $250,750
C. $11,467
D. $28,668
Answer: D
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
years, so that your deposit after 50 years = and $2,500 × (1.05)50 = $28,668.
13. The payment of interest not only on the original deposit, but on all previously accumulated
interest is called::
A. the nominal interest rate.
B. simple interest.
C. compound interest.
D. conflict of interest.
Answer: C
Difficulty: 01 Easy
Blooms: Remember
Feedback: Compound interest is the payment of interest on both the original deposit and all
accumulated interest.
5
14. Suppose when you are 21 years old, you deposit $1,000 into a bank account that pays annual
compound interest, and you do not withdraw from the account until your retirement at the age of
65, 44 years later. How much more will be in your account if the interest rate is 6 percent rather
than 5 percent?
A. $440
B. $1,549
C. $4,428
D. $8,557
Answer: C
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
years. At the interest rate of 6 percent, your deposit after 44 years = $1,000 × (1.06)44 = $12,985.
At the interest rate of 5 percent, your deposit after 44 years = $1,000 × (1.05)44 = $8,557. The
difference is $4,428.
15. Suppose when you are 21 years old, you deposit $1,000 into a bank account that pays annual
compound interest, and you do not withdraw from the account until your retirement at the age of
65, 44 years later. How much more will be in your account if the interest rate is 6 percent rather
than 4 percent?
A. $880
B. $2,390
C. $5,617
D. $7,369
Answer: D
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
years. At 6 percent interest, your deposit after 44 years = $1,000 × (1.06)44 = $12,985.48. At 4
percent interest, your deposit after 44 years = $1,000 × (1.04)44 = $5,616,52. The difference is
$7,369.
16. Small differences in annual growth rates of real GDP generate large differences in real GDP
over time because of the:
A. importance of average labor productivity.
B. power of compound interest.
C. diminishing returns to capital.
D. limits of economic growth.
Answer: B
6
Difficulty: 01 Easy
Blooms: Remember
Feedback: Compound interest pays interest on previously earned interest, so small differences in
growth rates expand into big differences over time.
17. If an economy maintains a small rate of growth for a long period of time, then the size of the
economy:
A. can only increase by a small amount.
B. can increase by a large amount.
C. can never double.
D. will stay nearly constant.
Answer: B
Difficulty: 01 Easy
Blooms: Remember
Feedback: Based on compound growth, even small rates of growth have large effects over time.
18. If real GDP per person were equal to $2,000 in 1900 and grew at a one percent annual rate,
what would be the value of real GDP per person 100 years later?
A. $2,210
B. $4,000
C. $5,410
D. $20,000
Answer: C
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: At one percent growth, the future value equation is: Future GDP = $2,000 × (1.01)100
= $5,410.
19. Real GDP per person in both Alpha and Omega is equal to $2,000. Over the next 100 years,
real GDP per person grows at a 1.5 percent annual rate in Alpha and at a 2.5 percent annual rate
in Omega. After 100 years, real GDP per person in Alpha is ______ smaller than real GDP per
person in Omega.
A. $2,000
B. $5,410
C. $8,864
7
D. $14,763
Answer: D
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: For Alpha, the future value equation is: Future GDP = $2,000 × (1.015)100 = $8,864.
For Omega, the future value equation is: Future GDP = $2,000 × (1.025)100 = $23,627. The
20. Real GDP per person in both Alpha and Omega is equal to $2,000. Over the next 100 years,
real GDP per person grows at a 1 percent annual rate in Alpha and at a 2 percent annual rate in
Omega. After 100 years, real GDP per person in Alpha is ______ smaller than real GDP per
person in Omega.
A. $2,000
B. $5,410
C. $9,080
D. $11,080
Answer: C
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: For Alpha, the future value equation is: Future GDP = $2,000 × (1.01)100 = $5,409.6.
For Omega, the future value equation is: Future GDP = $2,000 × (1.02)100 = $14,489.3. The
difference is $9,079.7 or $9,080.
21. Government policies that increase the long-term economic growth rate by a small amount
result in ______ in average living standards.
A. large increases
B. small increases
C. small decreases
D. no change
Answer: A
Difficulty: 01 Easy
Blooms: Remember
Feedback: Due to compound growth even changes that increase economic growth by a small
amount create large changes over time.
8
22. Real GDP per person in Richland is $20,000, while real GDP per person in Poorland is
$10,000. However, Richland's real GDP per person is growing at 1 percent per year, and
Poorland's real GDP per person is growing at 3 percent per year. After 50 years, real GDP per
person in Richland minus real GDP in Poorland is:
A. positive and greater than $10,000.
B. positive but less than $10,000.
C. zero.
D. negative.
Answer: D
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: For Richland, the future value equation is: Future GDP = $20,000 × (1.01)50 =
$32,893. For Poorland, the future value equation is: Future GDP = $10,000 × (1.03)50 = $43,839.
Real GDP per person in Richland minus real GDP in Poorland is $-10,946, which means
Poorland has surpassed Richland.
23. Real GDP per person in Richland is $20,000, while real GDP per person in Poorland is
$10,000. However, Richland's real GDP per person is growing at 1 percent per year, and
Poorland's real GDP per person is growing at 2 percent per year. After 50 years, real GDP per
person in Richland minus real GDP in Poorland is:
A. positive and greater than $10,000.
B. positive but less than $10,000.
C. zero.
D. negative.
Answer: B
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: For Richland, the future value equation is: Future GDP = $20,000 × (1.01)50 =
$32,893. For Poorland, the future value equation is: Future GDP = $10,000 × (1.02)50 = $26,916.
Real GDP per person in Richland minus real GDP in Poorland is $5,977.
24. Real GDP per person in Northland is $30,000, while real GDP in Southland is $10,000,
However, Northland's real GDP per person is growing at 1 percent per year, and Southland's real
GDP per person is growing at 3 percent per year. If these growth rates persist indefinitely, then:
A. Northland's real GDP per person will decline until it equals Southland's.
B. Northland's real GDP per person will always be between 1 and 2 percent greater than
Southland's.
C. Southland's real GDP per person will always be exactly 2 percent less than Northland's.
9
D. Southland's real GDP per person will eventually be greater than Northland's.
Answer: D
Difficulty: 02 Medium
Blooms: Understand
Feedback: Southland, due to the power of compound growth, will eventually overtake Northland.
25. Real GDP per person in Westland is $30,000, while real GDP in Eastland is $10,000,
Westland's real GDP per person is growing at 3 percent per year and Eastland's real GDP per
person is growing at 3 percent per year. If these growth rates persist indefinitely, then:
A. Eastland's real GDP per person will rise until it equals Westland's real GDP per person.
B. Westland's real GDP per person will always be at least $20,000 greater than Eastland's.
C. Eastland's real GDP per person will always be exactly $20,000 less than Westland's.
D. Eastland's real GDP per person will eventually be greater than Westland's.
Answer: B
Blooms: Understand
Feedback: Westland, due to the equality of growth rates, will never gain ground on Eastland, but
rather fall further behind as the compounded growth is larger in Westland. .
26. Real GDP per person in the United States was $9,864 in 1950. Over the next 48 years, it
grew at a compound annual rate of 2.0%. If, instead, real GDP per person had grown at an
average compound annual rate 2.5%, then real GDP per capita in the United States in 1998
would have been approximately ______ larger.
A. $2,370
B. $6,751
C. $12,530
D. $25,520
Answer: B
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Analyze
Feedback: 1998 U.S. real GDP = $9,864 × (1.02)48 = $25,519. If the growth rate would have
been 2.5% per year, the 1998 U.S. real GDP = $9,864 × (1.025)48 = $32,270. The difference is
$6,751.
10
27. Real GDP per person in the Canada was $7,377 in 1950. Over the next 48 years it grew at a
compound annual rate of 2.0%. If instead real GDP per person had grown at an average
compound annual rate 2.5%, then real GDP per capita in the Canada in 1998 would have been
approximately ______ larger.
A. $1,770
B. $5,049
C. $9,370
D. $24,130
Answer: B
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Analyze
Feedback: 1950 Canadian real GDP = $7,377 × (1.02)48 = $19,085. If the growth rate would
have been 2.5% per year, 1998 Canadian real GDP = $7,377 × (1.025)48 = $24,134. The
28. The key variable in determining changes in a country's standard of living is the:
A. interest rate.
B. inflation rate.
C. unemployment rate.
D. long-run rate of economic growth.
Answer: D
Difficulty: 01 Easy
Blooms: Remember
Feedback: The long-run rate of economic growth best explains changes in standards of living in
countries around the world.
29. Real GDP per person equals average labor productivity:

A. times one minus the unemployment rate.
B. minus the share of population employed.
C. times the labor force participation rate.
D. times the share of population employed.
Answer: D
Difficulty: 01 Easy
Topic: Why Nations Become Rich: The Crucial Role of Average Labor Productivity
Blooms: Remember
11
Feedback: To find real GDP per person, multiply the average output each worker produces times
the percentage of population employed.
30. Average labor productivity times the proportion of the population employed equals:
A. real GDP.
B. real GDP per person.
C. real GDP per worker.
D. output per worker.
Answer: B
Difficulty: 01 Easy
Blooms: Remember
31. Growth of real GDP per person is totally determined by the growth of average:
A. labor productivity and the proportion of the population employed.
B. labor productivity and the proportion of the population in the labor force.
C. labor force participation and the share of income going to capital.
D. labor force participation and the share of the population employed.
Answer: A
Difficulty: 01 Easy
Blooms: Remember
32. In symbolic terms where Y equals real GDP, POP equals total population, and N equals the
number of employed workers, Y/POP must equal:
A. Y/N × N/POP.
B. N/Y × POP/N.
C. Y/POP × N/POP
D. N/Y × N/POP
Answer: A
Difficulty: 01 Easy
Blooms: Remember
12
33 Real GDP per person can increase:

A. only if the share of the population employed increases.
B. only if the share of the population employed decreases.
C. only if average labor productivity increases.
D. if the share of population employed and/or average labor productivity increases.
Answer: D
Difficulty: 01 Easy
Blooms: Remember
the percentage of population employed. Real GDP per person can only grow if one of these
factors increases.
34. A nation's standard of living, as measured by real GDP per person, increases:
A. only if average labor productivity increases.
B. only if the share of population employed increases.
C. only if both average labor productivity and the share of population employed increase.
D. if either average labor productivity and/or the share of population employed increase.
Answer: D
Difficulty: 01 Easy
Blooms: Remember
the percentage of population employed. Real GDP per person can only grow if one of these
factors increases.
35. If the share of population employed in two countries is the same, average living standards
will be higher in the country with:
A. the smaller population.
B. the larger population.
C. higher average labor productivity.
D. lower average labor productivity.
Answer: C
13
Blooms: Understand
Feedback: To find real GDP per person, which gives the standard of living, multiply the average
output each worker produces times the percentage of population employed.
36. If average labor productivity in two countries is the same, average living standards will be
lower in the country with:
C. the higher share of population employed
D. the lower share of population employed.
Answer: D
Blooms: Understand
37. If average labor productivity in two countries is the same, average living standards will be
higher in the country with:
C. the higher share of population employed
D. the lower share of population employed.
Answer: C
Blooms: Understand
38. If 50 percent of the population in a country is employed and average labor productivity
equals $30,000, then real GDP per person equals:
A. $15,000.
B. $30,000.
C. $50,000.
D. $60,000.
Answer: A
Difficulty: 03 Hard
14
AACSB: Analytic
Blooms: Apply
output each worker produces times the percentage of population employed. In this case, real
GDP per person equals: ($30,000 × 0.5) = $15,000.
39. If real GDP per person in a country equals $40,000 and 60 percent of the population is
employed, then average labor productivity equals:
A. $24,000.
B. $40,000.
C. $60,000.
D. $66,667.
Answer: D
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: If real GDP per person is obtained by multiplying the average output each worker
produces times the percentage of population employed. Then average output per worker or
average labor productivity is = real GDP divided by the percentage of population employed =:
$40,000 / 0.60 = $66.667.
40. If real GDP per person in a country equals $20,000 and 40 percent of the population is
employed, then average labor productivity equals:
A. $8,000.
B. $20,000.
C. $40,000.
D. $50,000.
Answer: D
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: If real GDP per person is obtained by multiplying the average output each worker
produces times the percentage of population employed. Then average output per worker or
average labor productivity is = real GDP divided by the percentage of population employed =
$20,000 / 0.40 = $50,000.
41. The population of Alpha totals one million people, 40 percent of whom are employed.
Average output per worker in Alpha is $20,000. Real GDP per person in Alpha totals:
15
A. $8,000.
B. $12,000.
C. $20,000.
D. $50,000.
Answer: A
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: To find real GDP per person for Alpha, multiply the average output each worker
produces times the percentage of population employed. In this case, real GDP per person is:
($20,000 × 0.40) = $8,000.
42. The population of Omega totals one million people, 30 percent of whom are employed.
Average output per worker in Alpha is $30,000. Real GDP per person in Alpha totals:
A. $9,000.
B. $21,000.
C. $30,000.
D. $100,000.
Answer: A
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: To find real GDP per person for Omega, multiply the average output each worker
($30,000 × 0.30) = $9,000.
43. In Econland, 500,000 of the 2 million people in the country are employed. Average labor
productivity in Econland is $15,000 per worker. Real GDP per person in Econland totals:
A. $1,250.
B. $3,750.
C. $11,250.
D. $60,000.
Answer: B
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
16
Feedback: To find real GDP per person for Econland, multiply the average amount of output
each worker produces times the percentage of population employed. In this case, real GDP per
person is: ($15,000) × (500,000/2,000,000) = $3,750.
44. In Macroland, 500,000 of the 1 million people in the country are employed. Average labor
productivity in Macroland is $20,000 per worker. Real GDP per person in Macroland totals:
A. $1,000.
B. $10,000.
C. $15,000.
D. $40,000.
Answer: B
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: To find real GDP per person for Macroland, multiply the average output each worker
($20,000) × (500,000/1,000,000) = $10,000.
45. The growth of real GDP per person in the United States between 1960 and 2013 was the
result of:
A. growth in average labor productivity only.
B. growth in the share of population employed only.
C. growth in both average labor productivity and the share of population employed.
D. neither the growth in average labor productivity nor the share of population employed.
Answer: C
Difficulty: 01 Easy
Blooms: Remember
output each worker produces times the percentage of population employed. In this case, both
factors increased.
46. Assume that the share of population employed in all countries is 50 percent. Based on the
information in the table, which country has the highest real GDP per capita?
Country Population (millions) Average Labor Productivity ($)

A 100 2,000
B 150 10,000
C 75 25,000
D 250 50,000
E 95 60,000
17
A. Country A
B. Country B
C. Country D
D. Country E
Answer: D
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
the percentage of population employed. Note that all countries have the same share of population
working, 50 percent, so the real GDP in each country is half of the average labor productivity. So
real GDP per person in Country E is: ($60,000 × 0.50) = $30,000.
47. Assume that the share of population employed in all countries is 50 percent. Based on the
information in the table, which country has the smallest real GDP per capita?

A 100 2,000
B 150 10,000
C 75 25,000
D 250 50,000
E 95 60,000
A. Country A
B. Country B
C. Country D
D. Country E
Answer: A
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
the percentage of population employed. Note that all countries have the same share of population
working, 50 percent, so the real GDP in each country is half of the average labor productivity. So
real GDP per person in Country A is: ($2,000 × 0.50) = $1,000.
18
48. Suppose that the share of population employed in Country C is 50 percent, and that Countries
C and D have the same real GDP per capita. Based on the information in the table, what share of
Country D’s population must be employed?

A 100 2,000
B 150 10,000
C 75 25,000
D 250 50,000
E 95 60,000
A. 12.5 percent
B. 25.0 percent
C. 75.0 percent
D. 100.0 percent
Answer: B
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
the percentage of population employed. In this case, average labor productivity in Country C is
$25,000 and share of population employed is 0.50, so real GDP per person is $12,500. For
Country D to also have real GDP per person of $12,500, then the share of population working ×
the average labor productivity of $50,000 must be $12,500. Solving for the share of population
working, by dividing each side by the real GDP, we get $12,500 / $50,000 = .25 or 25 percent.
49. Suppose that the share of population employed in Country B is 50 percent, and that Countries
B and C have the same real GDP per capita. Based on the information in the table, what share of
Country C’s population must be employed?

A 100 2,000
B 150 10,000
C 75 25,000
D 250 50,000
E 95 60,000
A. 5.0 percent
B. 20.0 percent
C. 40.0 percent
D. 50.0 percent
Answer: B
Difficulty: 03 Hard
19
AACSB: Analytic
Blooms: Apply
the percentage of population employed. In this case, average labor productivity in Country B is
$10,000 and share of population employed is 0.50, so real GDP per person is $5,000. For
Country C to also have real GDP per person of $5,000, then the share of population working ×
the average labor productivity of $25,000 must be $5,000. Solving for the share of population
working, by dividing each side by the real GDP, we get $5,000 / $25,000 = .20 or 20 percent.
50. If average labor productivity increases, real GDP per person:

A. increases.
B. decreases.
C. remains constant.
D. may increase or decrease depending on the change in the share of population employed.
Answer: D
Blooms: Understand
Feedback: It is possible that increased average labor productivity is offset by a decline in the
share of population employed.
51. Assume that average labor productivity is the same in each country. Based on the
information in the table, which country has the highest real GDP per capita?
Country Population (millions) Share of Population Employed

(%)
A 100 60
B 150 55
C 75 50
D 250 45
E 95 40
A. Country A
B. Country B
C. Country C
D. Country D
Answer: A
Blooms: Understand
20
Feedback: To find real GDP per capita, multiply the average output each worker produces times
the percentage of population employed. Since output per worker is the same in each country, the
highest percentage of the population employed indicates the highest standard of living.
52. Assume that average labor productivity is the same in each country. Based on the
information in the table, which country has the smallest real GDP per capita?

(%)
A 100 60
B 150 55
C 75 50
D 250 45
E 95 40
A. Country A
B. Country B
C. Country D
D. Country E
Answer: D
Blooms: Understand
Feedback: To find real GDP per capita, multiply the average output per worker times the
percentage of population employed. Since output per worker is the same in each country, the
lowest percentage of the population employed indicates the lowest standard of living.
53. Suppose that average labor productivity in Country C is $5,000, and that Countries C and E
have the same real GDP per capita. Based on the information in the table, what must be the
average labor productivity in Country E?

(%)
A 100 60
B 150 55
C 75 50
D 250 45
E 95 40
A. $1,000
B. $1,500
C. $4,500
D. $6,250
Answer: D
21
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: Country C has real per capita GDP of ($5,000 × 0.5) = $2,500. If Country E has the
same real GDP per capita, then $2,500 = labor productivity (x) times the percentage of
population working of .5. Solving for x, we get = $2,500 / 0.4 = $6,250.
54. Suppose that average labor productivity in Country C is $6,000, and that Countries C and A
have the same real GDP per capita. Based on the information in the table, what must be the
average labor productivity in Country A?

(%)
A 100 60
B 150 55
C 75 50
D 250 45
E 95 40
A. $1,800
B. $2,400
C. $5,000
D. $7,200
Answer: C
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: Country C has 50% of its population working and labor productivity is $6,000, so real
per capita GDP is ($6,000 × 0.50) = $3,000. Country A has the same real GDP per capita and has
60% of its population working, so: average labor productivity × 0.60 = $3,000, and average labor
productivity equals $3,000 / .6 = $5,000.
55. One factor that contributed to the growth in the share of population employed in the United
States between 1960 and 2010 was increased:
A. labor union participation.
B. female labor force participation.
C. male labor force participation.
D. minimum wages.
Answer: B
Difficulty: 01 Easy
22
Blooms: Remember
Feedback: The structure of the American family has changed over the last generation and now
more women are working outside the home increasing the share of population employed.
56. Growth in the share of population employed in the United States is likely to decline in the
future because:
A. increasing female labor force participation is predicted.
B. increasing male labor force participation is predicted.
C. population growth is expected to increase.
D. an increasing proportion of those currently employed will be retiring.
Answer: D
Difficulty: 01 Easy
Blooms: Remember
Feedback: The “baby-boomer” generation have recently started retiring, and will continue to do
so in greater number in the coming decade.
57. In the long run, increases in output per person arise primarily from:
A. increases in female labor force participation.
B. increases in male labor force participation.
C. an increasing proportion of the population retiring
D. increases in average labor productivity.
Answer: D
Difficulty: 01 Easy
Blooms: Remember
Feedback: Increased average labor productivity is the foremost reason why nations become rich.
58. Long-run increases in living standards, as measured by real GDP per person, are primarily
the result of increases in:
A. population.
B. the money supply.
C. government budget surpluses.
D. average labor productivity.
Answer: D
Difficulty: 01 Easy
23
Blooms: Remember
Feedback: Increased average labor productivity is the foremost reason why nations become rich.
59. Mike and Tom debone chicken breasts for Ted's Chicken Co. Mike is new and can only
debone 60 chicken breasts per hour, while Tom's experience allows him to debone 120 chicken
breasts per hour. Both Mike and Tom work 40 hours per week. Their average hourly productivity
as a team is ______ chicken breasts.
A. 60
B. 75
C. 90
D. 100
Answer: C
Difficulty: 03 Hard
Topic: The Determinants of Average Labor Productivity
AACSB: Analytic
Blooms: Apply
Feedback: In this case, team productivity is the sum of each worker’s output divided by the
number of team members or (60 + 120) / 2 = 90.
debone 30 chicken breasts per hour, while Tom's experience allows him to debone 60 chicken
breasts per hour. Both Mike and Tom work 40 hours per week. Their average hourly productivity
as a team is ______ chicken breasts.
A. 30
B. 45
C. 60
D. 90
Answer: B
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: In this case, team average hourly productivity is 45 chicken breasts, which is the sum
of each worker’s hourly output divided by the number of team members or (30 + 60) / 2 = 45.
61. Fred and Barney fill egg cartons with eggs. Fred just started the job and can fill only 25
cartons an hour. Barney has significant on-the-job experience and can fill 50 cartons an hour.
Both Fred and Barney work 50 hours a week. Fred's average weekly productivity is ______
24
cartons; Barney's average weekly productivity is ______ cartons; and as a team their average
weekly productivity is ______ cartons.
A. 25; 50; 75
B. 25; 50; 37.5
C. 1,000; 2,000; 1,500
D. 1,250; 2,500; 1,875
Answer: D
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: Fred’s average weekly productivity is 1,250 cartons, which is the hourly rate of 25
times 50 hours worked. The same equation applies for Barney whose weekly productivity is
2,500 (50 × 50). Team average hourly productivity is 37.5 cartons, which is the sum of each
worker’s hourly output divided by the number of team members or (25 + 50) / 2. The team’s
average weekly productivity is1,875 cartons per week.
62. Fred and Barney fill egg cartons with eggs. Fred just started the job and can fill only 20
cartons an hour. Barney has significant on-the-job experience and can fill 40 cartons an hour.
Both Fred and Barney work 40 hours a week. Fred's average weekly productivity is ______
cartons; Barney's average weekly productivity is ______ cartons; and as a team their average
weekly productivity is ______ cartons.
A. 20; 40; 60
B. 20; 40; 30
C. 800; 2,000; 1,600
D. 800; 1,600; 1,200
Answer: D
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: Fred’s average weekly output is 800 cartons, which is the hourly rate of 20 times 40
hours worked. The same equation applies for Barney whose weekly productivity is 1,600 (40 ×
40). Team average weekly productivity is 30 cartons, which is the sum of each worker’s hourly
output divided by the number of team members. The team team’s average weekly productivity is
1,200 cartons per week.
63. Human capital is:

A. the factories and machinery used by humans in the production process.
B. the talents, training, and education of workers.
C. the financial resources available to humans for investment.
D. the factories and machinery made by workers.
25
Answer: B
Difficulty: 01 Easy
Blooms: Remember
Feedback: Human capital is the talents, training, and education of workers.
64. Economists refer to the talents, training, and education of workers as:
A. human capital.
B. physical capital.
C. average labor productivity.
D. labor supply.
Answer: A
Difficulty: 01 Easy
Blooms: Remember
Feedback: Human capital is the talents, training, and education of workers
65. Workers should invest in additional human capital as long as the:

A. marginal benefit exceeds the marginal cost.
B. marginal cost exceeds the marginal benefit.
C. opportunity cost exceeds the marginal benefit.
D. opportunity cost is zero.
Answer: A
Difficulty: 01 Easy
Blooms: Remember
Feedback: Investments in human capital follow the cost-benefit principle, i.e., marginal benefits
should exceed marginal costs.
66. Which of the following is an example of an investment in human capital?

A. A firm replaces manually controlled production with a computer controlled procedure.
B. A firm pays for workers to take college classes.
C. A chemical firm supports research to develop new chemicals.
D. A firm purchases new equipment for a manufacturing process.
Answer: B
26
Blooms: Understand
Feedback: Investments to develop worker skills is “human capital investment.”
67. The prediction that workers get additional training only when the rewards from the training
are expected to exceed the costs of the training (including the opportunity costs) is based on the:
A. principle of comparative advantage.
B. principle of diminishing returns to capital.
C. scarcity principle.
D. cost-benefit principle.
Answer: D
Blooms: Understand
Feedback: The cost-benefit principle says that marginal benefits of a decision should exceed
marginal costs for additional training to occur.
68. Getting a master’s degree is an example of investing in:

A. human capital.
C. technology.
D. research and development.
Answer: A
Blooms: Understand
Feedback: Investments to develop worker skills is “human capital investment.”
69. Providing workers with on-the-job training will increase:

A. average labor productivity.
B. the share of the population employed.
C. the unemployment rate.
D. the labor force participation rate.
Answer: A
Blooms: Understand
27
Feedback: On-the-job training is a form of human capital investment. This investment usually
increases average labor productivity.
70. When a firm builds a new factory, this is an example of an investment in:
A. human capital.
C. the market.
D. research and development.
Answer: B
Blooms: Understand
Feedback: When businesses invest in a new plant, equipment, and/or factories it is physical
capital investment. These investments usually increase productivity.
71. Which of the following is an example of an investment in physical capital?

A. A firm trains workers to operate new machinery.
B. A firm pays for workers to take college classes.
C. A chemical firm employs chemists to develop new chemicals.
D. A firm purchases new equipment for a manufacturing process.
Answer: D
Blooms: Understand
Feedback: When businesses invest in a new plant, equipment, and/or factories it is physical
capital investment. These investments usually increase productivity.
debone 60 chicken breasts per hour by hand, while Tom's experience allows him to debone 120
chicken breasts per hour by hand. Ted buys one new machine that can debone 100 chicken
breasts per hour. Both Mike and Tom work the same 40 hours per week, but one of them is
assigned to operate the machine instead of deboning the chicken breasts by hand. To obtain
maximum average hourly productivity, ______ is assigned to use the machine and their
combined average hourly productivity as a team is ______ chicken breasts.
A. Mike; 80
B. Mike; 110
C. Tom; 80
D. Tom; 110
Answer: B
28
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: Mike is assigned to the machine because he is the least efficient producer. After
getting the machine, the team debones 220 chicken breasts per hour (Mike deboned 100 and Tom
deboned 120), for an average of 110 per worker.
debone 30 chicken breasts per hour by hand, while Tom's experience allows him to debone 60
chicken breasts per hour by hand. Ted buys one new machine that can debone 100 chicken
breasts per hour. Both Mike and Tom work the same 40 hours per week, but one of them is
assigned to operate the machine instead of deboning the chicken breasts by hand. To obtain
maximum average hourly productivity, ______ is assigned to use the machine and their
combined average hourly productivity as a team is ______ chicken breasts
A. Mike; 65
B. Mike; 80
C. Tom; 65
D. Tom; 80
Answer: B
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: Mike is assigned to the machine because he is the least efficient producer. After
getting the machine, the team debones 160 chicken breasts per hour (Mike deboned 100 and Tom
deboned 60), for an average of 80 per worker.
74. Physical capital is:

A. the factories and machinery used to produce other goods and services.
B. the talents, training, and education of workers.
C. the financial resources available for investment.
D. the physical labor of workers.
Answer: A
Difficulty: 01 Easy
AACSB: Analytic
Blooms: Remember
Feedback: Physical capital is the factories and machinery used to produce other goods and
services.
29
75. Long-lived goods used to produce other goods and services are called:
A. financial capital.
B. human capital.
C. physical capital.
D. inventories.
Answer: C
Difficulty: 01 Easy
AACSB: Analytic
Blooms: Remember
Feedback: Physical capital is the factories, machinery, and other long-lived goods used to
produce other goods and services.
76. Jim and Fred are the only two cashiers employed at a retail store. Each of them works the
same 40 hours per week and each can check out 30 customers per hour by manually entering the
price of each product purchased into the cash register. The store owner replaces the old cash
registers with new ones that automatically scan product prices into the register. With the new
cash registers, Jim and Fred can each check out 60 customers per hour. Their average labor
productivity as a team before the new cash registers were introduced was ______ customers per
hour and ______ customers per hour after the new machines were installed.
A. 30; 60
B. 30; 120
C. 60; 120
D. 1,200; 2,400
Answer: A
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: The team’s beginning average hourly output was 30 customers per hour. After buying
the new cash registers, the team’s average hourly output increased to 60 customers per hour.
77. Betty and Wilma are the only two cashiers employed at a retail store. Each of them works the
same 40 hours per week. By manually entering the price of each product purchased into the cash
register, Betty can check out 20 customers and Wilma can check out 30 customers per hour. The
store owner replaces the old cash registers with new ones that automatically scan product prices
into the register. With the new cash registers, Betty and Wilma can each check out 60 customers
per hour. Their average labor productivity as a team before the new cash registers were
introduced was ______ customers per hour and ______ customers per hour after the new
machines were installed.
A. 25; 60
B. 50; 120
C. 50; 60
D. 1,000; 2,400
30
Answer: A
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: The team’s beginning average hourly output was 25 customers per hour (50 / 2). After
buying the new cash registers, the team’s average hourly output was 60 customers per hour.
78. Countries with small amounts of capital per worker tend to have ______ levels of real GDP
per person and ______ levels of average labor productivity.
A. high; high
B. high; low
C. low; low
D. low; average
Answer: C
Difficulty: 01 Easy
Blooms: Remember
Feedback: Countries with small amounts of capital per worker suffer from low productivity; this
results in low real GDP per person.
79. The principle of diminishing returns to capital states that if the amount of labor and other
inputs employed is held constant, then the greater the amount of capital in use the:
A. less is produced.
B. less production is wasted.
C. the more an additional unit of capital adds to production.
D. the less an additional unit of capital adds to production.
Answer: D
Difficulty: 01 Easy
Blooms: Remember
Feedback: This is the definition of the “principle of diminishing returns” as applied to addition of
capital stock.
80. The principle that if the amount of labor and other inputs is held constant, then the greater the
amount of capital in use, the less an additional unit of capital adds to production is called the
principle of:
A. increasing average capital productivity.
31
B. diminishing returns to capital.
C. increasing returns to capital.
D. decreasing output per unit of capital.
Answer: B
Difficulty: 01 Easy
Blooms: Remember
Feedback: This is the definition of the “principle of diminishing returns” as applied to addition of
capital stock.
81. Increasing the capital available to the workforce, holding other factors constant, tends to
______ total output while ______ average labor productivity.
A. increase; decreasing
B. increase; increasing
C. increase; not changing
D. decrease; increasing
Answer: B
Difficulty: 01 Easy
Blooms: Remember
Feedback: Increasing the capital available to workers increases their average labor productivity
and therefore, output.
82. Alpha has $40,000 of capital per worker, while Beta has $5,000 of capital per worker. In all
other respects, the two countries are the same. According to the principle of diminishing returns
to capital, an additional unit of capital will increase output ______ in Alpha compared to Beta,
holding other factors constant.
A. more
B. less
C. not at all
D. by the same amount
Answer: B
Blooms: Understand
Feedback: Since Alpha starts out with more capital per worker, the marginal increase in worker
output in Alpha is less than the marginal increase in Beta (where workers have much less capital
to begin with).
32
83. Gamma has $30,000 of capital per worker, while Omega has $7,500 of capital per worker. In
all other respects, the two countries are the same. According to the principle of diminishing
returns to capital, an additional unit of capital will increase output ______ in Gamma compared
to Omega, holding other factors constant.
A. more
B. less
C. not at all
D. by the same amount
Answer: B
Blooms: Understand
Feedback: Since Gamma starts out with more capital per worker, the marginal increase in worker
output in Gamma is less than the marginal increase in Omega (where workers have much less
capital to begin with).
84. Based on the table below and the principle of diminishing returns to capital, then total
packages wrapped when a fourth machine is installed must be less than ______ packages.
Number of (Identical) Machines Total Packages Wrapped

1 10,000
2 13,000
3 15,000
A. 2,000
B. 15,000
C. 16,000
D. 17,000
Answer: D
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: The marginal return to the first machine was 10,000 packages, the marginal return to
the second machine was 3,000 packages (13,000 – 10,000) and the marginal return to the third
machine was 2,000 packages (15,000 – 13,000). Thus, the marginal return to the third machine
has to be less than 2,000 packages, which makes the total less than 17,000 packages.
85. Based on the table below and the principle of diminishing returns to capital, then total
packages wrapped when a fourth machine is installed must be less than ______ packages.
33
Number of (Identical) Machines Total Packages Wrapped
1 5000
2 9,000
3 12,000
A. 3,000
B. 4,000
C. 12,000
D. 15,000
Answer: D
Difficulty: 03 Hard
AACSB: Analytic
Blooms: Apply
Feedback: The marginal return to the first machine was 5,000 packages, the marginal return to
the second machine was 4,000 packages (9,000 – 5,000) and the marginal return to the third
machine was 3,000 packages (12,000 – 9,000). Thus, the marginal return to the third machine
has to be less than 3,000 packages, which makes the total less than 15,000 packages.
86. Providing a fixed number of workers with additional capital will ______ average labor
productivity at a ______ rate.
A. increase; increasing
B. increase; constant
C. increase; decreasing
D. decrease; decreasing
Answer: C
Difficulty: 01 Easy
Blooms: Remember
Feedback: More capital per worker increases average labor productivity, but this increase comes
at a decreasing rate.
87. Diminishing returns to capital is a consequence of firms' incentives to use each piece of
capital as productively as possible and illustrates the:
A. principle of comparative advantage.
B. principle of increasing opportunity costs.
C. scarcity principle.
D. cost-benefit principle.
Answer: B
34
Blooms: Understand
Feedback: Diminishing returns to any factor input is a restatement of the principle of increasing
opportunity costs.
88. Because of diminishing returns to capital, there is a limit to the increases in average labor
productivity that can be gained from additional or improved ______.
A. availability of land and natural resources
B. physical capital
C. imports
D. entrepreneurship
Answer: B
Blooms: Understand
Feedback: While all inputs are subject to the law of diminishing returns, Only physical capital is
subject to diminishing returns to capital.
89. Usually an abundance of natural resources ______ average labor productivity.

A. doubles
B. increases
C. decreases
D. has no effect on
Answer: B
Difficulty: 01 Easy
Blooms: Remember
Feedback: Abundant natural resources, given freely from nature, usually increase average labor
productivity.
90. The discovery and utilization of vast, previously unknown oil and mineral deposits in a
country will increase:
D. the quantity of human capital.
Answer: A
35
Blooms: Understand
Feedback: Abundant natural resources, given freely from nature, usually increase average labor
productivity.
91. Most economists agree that ______ are the single most important source of productivity
improvements.
A. increases in human capital
B. increases in physical capital
C. technological advances
D. discoveries of natural resources
Answer: C
Difficulty: 01 Easy
Blooms: Remember
Feedback: Technological advances, like the invention and diffusion of cheap computing, have a
large and sudden contribution to productivity.
92. Three workers run a house painting business and always work the same number of hours
together. The paint they use requires applying two coats. Each worker paints 200 square feet per
hour using a roller or 80 square feet per hour using a brush. If a technological advance provides a
paint that only requires one coat, their average labor productivity per hour as a team:
A. increases.
B. decreases.
C. remains the same.
D. may either increase or decrease.
Answer: A
Blooms: Understand
Feedback: This technological advance improves average labor productivity of individuals and
the team whether they use a roller or a brush.
36
93. The application of new technologies to the production process will increase:
Answer: A
Blooms: Understand
Feedback: New technologies increase worker productivity by giving workers better tools. This
increases average labor productivity.
94. When new technologies are applied to the production and distribution of goods and services:
A. scarcity is eliminated.
B. diminishing returns to capital no longer hold.
C. diminishing returns to capital still hold.
D. average labor productivity decreases.
Answer: C
Blooms: Understand
Feedback: Although new technologies generally improve average labor productivity,
technological additions are still subject to diminishing returns to capital.
95. The introduction of new technologies to production is ______ source of productivity

improvement.
A. the most important
B. the only
C. the least important
D. no longer a
Answer: A
Difficulty: 01 Easy
Blooms: Remember
Feedback: Technological advances, like the invention and diffusion of cheap computing, have a
large and sudden contribution to productivity improvements.
37
96. Entrepreneurs are people who:
A. engage exclusively in business travel.
B. entertain the workers.
C. run businesses on a day-to-day basis.
D. create new economic enterprises.
Answer: D
Difficulty: 01 Easy
Blooms: Remember
Feedback: Entrepreneurs take business risks to earn profits. As entrepreneurs they create new
economic enterprises.
97. Business managers are people who:

A. engage exclusively in business travel.
B. entertain the workers.
C. run businesses on a day-to-day basis.
D. own the physical capital used in production.
Answer: C
Difficulty: 01 Easy
Blooms: Remember
Feedback: This is the definition of “business managers.” Note: they are different from
entrepreneurs because entrepreneurs take risks whereas business managers often do not.
98. ______ start new economic enterprises, while ______ run the enterprises on a day-to-day
basis.
A. Entrepreneurs; managers
B. Mangers; entrepreneurs
C. Mangers; laborers
D. Entrepreneurs; laborers
Answer: A
Blooms: Understand
Feedback: Entrepreneurs take risks when they start new business enterprises whereas managers
run the business but often do not bear the business risks.
38
99. Entrepreneurs contribute to increased average labor productivity in each of the following
ways except by:
A. introducing new production methods.
B. implementing new technological processes.
C. developing new products.
D. assigning workers to jobs.
Answer: D
Blooms: Understand
Feedback: Entrepreneurs take risks when they start new business enterprises whereas managers
run the business but often do not bear the business risks.
100. Managers contribute to increased average labor productivity in each of the following ways
except by:
A. developing new products.
B. obtaining financing.
C. assigning workers to jobs.
D. dealing with suppliers.
Answer: A
Blooms: Understand
Feedback: Managers run the business but often do not bear business risks, whereas
entrepreneurs take risks when they start new business activities.
101. The implementation of new production methods by managers, such as the "just-in-time"
inventory system, increases:
Answer: A
Blooms: Understand
Feedback: New inventions and innovations make workers more efficient, thus increase average
labor productivity.
39
102. Organizing production, obtaining financing, assigning workers to jobs, and dealing with
suppliers are among the ways that ______ increases average labor productivity.
A. human capital
B. physical capital
C. an entrepreneur
D. a manager
Answer: D
Difficulty: 01 Easy
Blooms: Remember
Feedback: Managers run the business but often do not bear business risks.
103. Developing new products and services as well as introducing new production methods are
among the ways that ______ increases average labor productivity.
A. human capital
B. physical capital
C. an entrepreneur
D. a manager
Answer: C
Difficulty: 01 Easy
Blooms: Remember
Feedback: Entrepreneurs take risks when they start new businesses. The intent of these new
activities is to increase factor productivity.
104. The introduction of an overnight delivery service that guarantees the delivery of packages
anywhere in the world overnight would increase:
B. the share of population employed.
C. the labor force participation rate.
D. the unemployment rate.
Answer: A
Blooms: Understand
Feedback: This new service would create the opportunity for fewer business interruptions and
therefore increase average labor productivity.
40
105. Most political scientists and economists agree that ______ is detrimental to economic
growth.
A. a set of well-defined property rights
B. the free and open exchange of ideas
C. political instability
D. a just-in-time inventory system
Answer: C
Difficulty: 01 Easy
Blooms: Remember
Feedback: Political instability creates an undesirable business climate because firm owners
cannot anticipate when the government might change the rules.
106 Well-defined property rights:

A. are clearly written in English.
B. restrict the use of land and natural resources to productive uses.
C. allow the government to confiscate property.
D. clearly state who owns resources and how the resources can be used.
Answer: D
Difficulty: 01 Easy
Blooms: Remember
Feedback: Well-defined property rights clearly state who owns resources and how the resources
can be used.
107. A political system that promotes the free and open exchange of ideas:
A. will not have well-defined property rights.
B. slows the development of new technologies and products.
C. increases average labor productivity.
D. is detrimental to economic growth.
Answer: C
Difficulty: 01 Easy
Blooms: Remember
Feedback: Political stability and transparency creates a favorable business climate because firm
owners can rely on government rules.
41
108. At the time it collapsed in 1991, the Soviet Union possessed all of the factors that promote
increases in economic growth except:
A. a highly educated worker force.
B. a large stock of capital.
C. abundant natural resources.
D. a political and legal environment that promoted economic productivity.
Answer: D
Difficulty: 01 Easy
Blooms: Remember
Feedback: The fall of the former Soviet Union was largely caused by an erratic political and
legal environment that stifled business enterprise.
109. Governments contribute to increased average labor productivity in each of the following
ways except by:
A. establishing well-defined property rights.
B. maintaining political stability.
C. imposing taxes on wages.
D. allowing the free and open exchange of ideas.
Answer: C
Blooms: Understand
Feedback: Imposing taxes on wages discourage work, which reduces labor productivity.
110. Each of the following statements describes how the political and legal environment
encourages productivity except:
A. Well-defined property rights encourage production and saving.
B. Political stability promotes economic growth.
C. Price changes in markets give suppliers incentives to supply goods to markets.
D. Pay rates determined by a governmental planning agency provide workers with stronger
incentives to work hard than market wages.
Answer: D
Blooms: Understand
42
Feedback: Centralized governmental planning agencies, because of the complexity of economies,
have done a poor job of setting proper pay rates. Most economists agree that par rates based on
performance provides much better incentives to work hard.
111. The establishment of well-defined property rights increases:

B. the amount of pollution.
D. the labor force participation rate.
Answer: A
Blooms: Understand
Feedback: Well-defined property rights give individuals and business firms incentives to amass
wealth because they know property is protected. This induces firms to invest, which increases
average labor productivity. Property rights are also often an essential part in obtaining credit for
firms and individuals.
112. Average labor productivity is determined by:

A. consumption, investment, government spending, and net exports.
B. the number employed, unemployed, and the labor force participation rate.
C. the quantity and quality of human capital, physical capital, technology, natural resources,
entrepreneurship, and the legal and political environment.
D. the real interest rate, the nominal interest rate, and the rate of inflation.
Answer: C
Difficulty: 01 Easy
Blooms: Remember
Feedback: Average labor productivity depends on many things. These can be summarized by
saying it depends on those conditions which help workers do their jobs better.
113. The quantity and quality of human capital, physical capital, technology, natural resources,
entrepreneurship, and the legal and political environment determine the:
A. unemployment rate.
B. labor force participation rate.
C. average labor productivity.
D. real interest rate.
Answer: C
Difficulty: 01 Easy
43
Blooms: Remember
Feedback: Average labor productivity depends on many things. These can be summarized by
saying it depends on those conditions which help workers do their jobs better.
114. Each of the following increases average labor productivity except:

A. more human capital.
B. more physical capital.
C. more central planning.
D. more natural resources.
Answer: C
Difficulty: 01 Easy
Blooms: Remember
Feedback: Centralized governmental planning agencies stifle incentives and have done a poor
job increasing average labor productivity.
115. The average annual growth rates of labor productivity from 1948 to 1973 were ______ the
average rates over the period from 1973 to 1995.
A. more rapid than
B. slower than
C. about the same as
D. more rapid in the U.S., but slower in other industrialized countries than
Answer: A
Difficulty: 01 Easy
Blooms: Remember
Feedback: The 1947-1973 period saw high annual growth in labor productivity averaging 2.5%
per year, however labor productivity fell by more than half to about 1.1 percent annually during
the 1973-1995 period.
116. The productivity slowdown of the 1970's occurred:

A. only in the U.S.
B. only in the U.S. and the United Kingdom.
C. only in the U.S, the United Kingdom, and Japan.
D. around the world.
Answer: D
44
Difficulty: 01 Easy
Blooms: Remember
Feedback: The productivity slowdown of the 1970’s, arguably due to higher oil prices, was
experienced worldwide.
117. U.S. productivity growth has rebounded since 1995 largely as a result of:
A. increases in human capital.
B. discoveries of new natural resources.
C. increased political stability.
D. advances in information and Communication Technology (ICT).
Answer: D
Difficulty: 01 Easy
Blooms: Remember
Feedback: The invention and diffusion of the Internet and related technologies has caused a burst
of productivity growth since 1995.
118. Advances in information and communication technology are the principal factors cited for
the:
A. slowdown in productivity growth between 1973 and 1995.
B. speedup in productivity growth between 1973 and 1995.
C. slowdown in productivity growth since 1995.
D. speedup in productivity growth since 1995.
Answer: D
Difficulty: 01 Easy
Blooms: Remember
Feedback: The invention and diffusion of the Internet and related technologies has caused a burst
of productivity growth since 1995.
119. A worldwide slowdown in productivity growth occurred:

A. before 1950.
B. in the 1950s and 1960s.
C. in the 1960s and 1970s.
D. in the 1970s and 1980s.
Answer: D
45
Difficulty: 01 Easy
Blooms: Remember
Feedback: There was a worldwide productivity slowdown of the 1970s and 1980, arguably due
to higher oil prices.
120. Real GDP is not a perfect measure of economic well-being because it excludes the value of
all of the following except:
A. leisure time.
B. goods and services available in the market economy.
C. nonmarket economic activity.
D. goods and services produced in the underground economy.
Answer: B
Section: Real GDP and Economic Well-Being
Blooms: Understand
Feedback: GDP only measures things that are purchased in conventional markets, which
excludes the underground economy, nonmarket activity, and leisure time.
121. GDP excludes important factors that affect people's well-being, such as the value of:
A. leisure time.
B. government purchases of goods and services.
C. services purchased by households.
D. goods produced domestically but sold to foreigners.
Answer: A
Difficulty: 01 Easy
Blooms: Remember
Feedback: Since leisure time is not traded in conventional markets, it is not measured in GDP
even though leisure time is very important.
46
122. If you knew that two countries had the same level of real GDP per person, what additional
piece of information would help you determine in which country people had a better standard of
living?
A. The total physical volume of output for each country
B. The population of each country
C. The average number of hours worked per week in each country
D. The average level of prices in each country
Answer: C
Blooms: Understand
Feedback: GDP does not included information about how many hours were worked to produce
that level of GDP.
123. Using real GDP to compare the level of economic well-being in two countries may be
misleading because the value of ______ contributes to economic well-being, but is excluded
from real GDP.
A. capital goods
B. services
C. leisure
D. formal education
Answer: C
Blooms: Understand
124. If two countries are economically identical except that there is significant air and water
pollution in one, then the level of GDP:
A. will be higher in the country with pollution.
B. will be higher in the country with no pollution.
C. will be the same in both countries.
D. will be greater than the level of economic well-being in each country.
Answer: C
Blooms: Understand
47
Feedback: GDP does not account for pollution and other non-traded features of the economy.
125. If two countries are economically identical except that citizens in one country have more
leisure time, then the level of GDP:
A. will be higher in the country with more leisure time.
B. will be higher in the country with less leisure time.
C. will be the same in both countries.
D. will be greater than the level of economic well-being in each country.
Answer: C
Blooms: Understand
126. Although GDP is not the same as economic well-being, high levels of GDP are positively
correlated with all of the following except:
A. longer life expectancies.
B. higher rates of literacy.
C. higher material standards of living.
D. higher rates of infant mortality.
Answer: D
Blooms: Understand
Feedback: High GDP correlates with many favorable non-economic conditions. Conversely, low
GDP correlates with higher rates of infant mortality and many other non-favorable economic
conditions.
127. Countries with high real GDP tend to have ______ infant mortality rates and ______
literacy rates than countries with low real GDP.
A. higher; higher
B. higher; lower
C. lower; higher
D. lower; lower
Answer: C
48
Blooms: Understand
GDP correlates with higher rates of infant mortality and lower rates of literacy.
128. One shortcoming of real GDP as an indicator of society's social well-being is that it fails to
take into account the:
A. growth in productivity.
B. increase in the quantity of goods.
C. non-market production.
D. change in the price level.
Answer: C
Difficulty: 01 Easy
Blooms: Remember
Feedback: Real GDP does not measure things that are not traded in conventional markets, such
as mowing your own lawn or cooking your own dinner.
129. GDP would be a better measure of economic well-being if it included:

A. the costs of education.
B. the total value of intermediate goods.
C. the market value of final goods.
D. the value of leisure.
Answer: D
Difficulty: 01 Easy
Blooms: Remember
130. Despite some problems with equating GDP with economic well-being, higher real GDP per
person does imply greater economic well-being because it tends to be positively associated with:
A. crime, pollution, and economic inequality.
B. better education, health and life expectancy.
C. poverty, depletion of nonrenewable resources, and congestion.
D. unemployment, availability of goods and services, and better education.
49
Answer: B
Difficulty: 01 Easy
Blooms: Remember
GDP correlates with many unfavorable non-economic conditions.
131. The costs of economic growth include all of the following except consumption sacrificed for:
A. physical capital formation
B. acquiring new human capital
C. research and development into new technologies
D. additional hours of leisure
Answer: B
Difficulty: 01 Easy
Topic: The Costs of Economic Growth
Blooms: Remember
Feedback: If society saves today it can expand its capital stock for the future. However, this
expansion of capital stock means giving up resources that could be used for current consumption.
132. Additional economic growth should be pursued when:

A. new technologies are discovered.
B. scarcity exists.
C. the marginal costs of growth exceed the marginal benefits.
D. the marginal costs of growth are less than the marginal benefits.
Answer: D
Difficulty: 01 Easy
Blooms: Remember
Feedback: Economic growth is a social choice, like many others. This choice, like all economic
choices, is best made by using the marginal benefit- marginal cost principle.
133. The benefits of economic growth are _____, while the costs of economic growth are _____.
A. increased output per person; too small for concern
B. increased output per person; the consumption sacrificed in exchange for capital formation
C. increased output per person; less future consumption
D. more current consumption; less future consumption
Answer: B
50
Difficulty: 01 Easy
Blooms: Remember
Feedback: If society saves today it can expand its capital stock for the future. However, this
expansion of capital stock means giving up resources that could be used for current consumption.
134. The cost of a higher living standard in the future is giving up:
A. current consumption.
B. current investment.
C. future consumption.
D. future investment.
Answer: A
Difficulty: 01 Easy
Blooms: Remember
Feedback: If society saves today it can expand its capital stock and increase living standards in
the future. However, this expansion of capital stock means giving up resources that could be
used for current consumption.
135. More economic growth is not necessarily better unless the benefits of growth:
A. exceed the costs of growth.
B. increase average labor productivity.
C. increase real GDP per capita.
D. increase human capital.
Answer: A
Difficulty: 01 Easy
Blooms: Remember
Feedback: Economic growth, like other economic decisions, should be decided by the marginal
benefits versus marginal costs rule.
136. Higher future living standards require:

A. reduced rates of current consumption.
B. increased rates of population growth.
C. increased rates of current consumption.
D. reduced rates of current investment.
Answer: A
51
Difficulty: 01 Easy
Blooms: Remember
137. To increase future living standards by pursuing higher current rates of investment spending,
an economy must:
A. allow higher rates of current consumption.
B. reduce current rates of consumption spending.
C. reduce the current capital stock.
D. decrease the amount of future research and development spending.
Answer: B
Difficulty: 01 Easy
Blooms: Remember
138. The major economic cost of growth is:

A. higher interest rates.
B. consumption sacrificed for capital formation.
C. higher inflation rates.
D. investment in stocks and bonds.
Answer: B
Difficulty: 01 Easy
Blooms: Remember
52
139. In order to increase the capital stock, society must divert ______ that could be otherwise
used to increase the current supply of _____.
A. money; consumer goods
B. credit; labor
C. money; labor
D. resources; consumer goods
Answer: D
Difficulty: 01 Easy
Blooms: Remember
Feedback: Capital stock growth requires investments into capital goods, which means giving up
resources that could be used for current consumption.
140. An example of a government policy to increase human capital formation is:

A. the construction of an interstate highway system.
B. the provision of publicly-funded education.
C. government support for basic research.
D. maintaining a well-functioning legal system.
Answer: B
Topic: Promoting Economic Growth
Blooms: Understand
Feedback: Publicly funded education expands education opportunities greatly, which results in
much higher levels of human capital formation. Note that all the others options are examples of
ways that governments can improve productivity through the increased use of other important
resources.
141. An example of a government policy to increase physical capital formation is:

B. government support for basic research.
C. maintaining a well-functioning legal system.
D. the provision of publicly-funded education.
Answer: A
Blooms: Understand
Feedback: Governments can provide public physical capital, which is called “infrastructure.”
The interstate highway system is one example. Note that all the others options are examples of
53
resources.
142. An example of a government policy to enhance technological progress is:

B. government support for basic research.
D. the provision of publicly-funded education.
Answer: B
Blooms: Understand
Feedback: Governments can provide support for basic research to introduce and develop new
technologies and thereby improve productivity. Note that all the others options are examples of
resources.
143. An example of a government policy to provide a framework within which the private sector
can operate productively is:
A. the taxation of savings.
B. the suppression of political dissent.
D. government ownership of capital.
Answer: C
Blooms: Understand
Feedback: Government rules and policies can provide social stability, and this often occurs
because of a well-functioning legal system.
144. An example of a government policy to provide a framework within which the private sector
can operate productively is:
A. the taxation of savings.
B. the suppression of political dissent.
C. establishing well-defined property rights.
D. government ownership of capital.
Answer: C
54
Blooms: Understand
Feedback: Government policies can provide social stability, and this often occurs because
property rights are well-defined and citizens create wealth knowing it will not be arbitrarily taken
away.
145. In order to promote growth, the poorest countries—in contrast to the middle-level and rich
countries—need most to:
A. invest in human capital.
B. improve their infrastructure.
C. improve their legal and political environments.
D. increase their capital stock.
Answer: C
Difficulty: 01 Easy
Blooms: Remember
Feedback: Foreign and domestic saving is nearly absent in the poorest countries of the world
because savers worry their money cannot be protected by contract law.
146. The biggest problem thwarting economic growth in the poorest countries, compared to the
richest countries, is:
A. insufficient human capital.
B. outdated physical capital.
C. no access to technology.
D. a legal and/or political environment unfavorable to economic growth.
Answer: D
Difficulty: 01 Easy
Blooms: Remember
because savers worry their money cannot be protected by contract law. With low saving there is
little investment into new capital or technology.
147. The biggest barrier to growth for many of the poorest countries in the world is the need for:
A. larger populations.
B. more human capital.
C. more physical capital.
D. improved legal and political frameworks.
55
Answer: D
Difficulty: 01 Easy
Blooms: Remember
because savers worry their money cannot be protected by contract law. With low saving there is
little investment into new capital or technology.
148. A government policy of providing free public education is an example of a policy to

promote economic growth by:
A. increasing human capital.
B. increasing physical capital.
C. improving technology.
D. increasing the availability of natural resources.
Answer: A
Blooms: Understand
Feedback: Government investment to provide free public education provides the work force with
essential skills that increase human capital.
149. A government policy of providing job training for unskilled youths is an example of a
policy to promote economic growth by:
Answer: A
Blooms: Understand
Feedback: Government provision of on-the-job training gives the work force essential skills that
increase human capital.
56
150 A government policy that allows retirement savings to accumulate tax-free is an example of
a policy to promote economic growth by:
Answer: B
Blooms: Understand
Feedback: Government tax policy that promotes savings gives savers incentives to accumulate
wealth. Savings, in turn, increases investment in physical capital.
151. A government policy to build bridges and dams is an example of a policy to promote
economic growth by:
D. improving the social and legal environment
Answer: B
Blooms: Understand
Feedback: Government policy of building infrastructure, like bridges and dams, promotes
physical capital that is essential to economic growth.
152. The construction of the interstate highway system in the United States is an example of a
government policy to promote economic growth by:
D. improving the social and legal environment.
Answer: B
Blooms: Understand
Feedback: Government policy of building infrastructure, like interstate highways, promotes
physical capital that is essential to economic growth.
57
153. Government support of basic research by funding scientists through the National Science
Foundation is an example of a government policy to promote economic growth by:
Answer: C
Blooms: Understand
Feedback: Government policy supporting basic advances technology, promotes economic
growth.
154. Sharing the results of applied research conducted under government sponsorship with the
private sector, such as the development of the Global Positioning System (GPS), is an example
of a government policy to promote economic growth by:
Answer: C
Blooms: Understand
Feedback: Government policy supporting applied research advances technology, which promotes
economic growth.
155. In order to promote growth through increased quantities of physical capital, governments
must promote:
A. a better educational system.
B. job training programs.
C. high rates of saving and investing.
D. funding for basic science.
Answer: C
Difficulty: 01 Easy
Blooms: Remember
58
Feedback: Government polices that promotes savings gives savers incentives to accumulate
wealth. Savings, in turn, increases investment in physical capital.
156. Research confirms that government provision of infrastructure:

A. hinders economic growth.
B. promotes economic growth.
C. increases human capital.
D. leads to reduced spending on research and development.
Answer: B
Difficulty: 01 Easy
Blooms: Remember
Feedback: Government policy of building infrastructure, like interstate highways, promotes
physical capital, which is essential to economic growth.
157. Which of the following is consistent with a political and legal framework that discourages
economic growth?
A. The allocation of bank credit by the government rather than by markets
B. A speedy approval process for new businesses
C. Agricultural prices that are allowed to vary according to market conditions
D. Taxation and regulation that are not very burdensome
Answer: A
Difficulty: 01 Easy
Blooms: Remember
Feedback: Bank credit is allocated well by private markets, based on the risk-reward trade-off,
whereas credit allocated by governments tends to be faulty because of corruption and strong
political influence.
158. High rates of saving and investing in the private sector promote economic growth by:
B. improving the social and legal environment.
C. increasing physical capital.
D. improving technology.
Answer: C
Difficulty: 01 Easy
Blooms: Remember
59
Feedback: High rates of savings, which result from well-functioning financial markets, provide
the funds needed for investment into physical capital.
159. Economic growth may face environmental limits because:

A. economic growth can take the form of new, different, and "cleaner" goods and services.
B. economic growth may lead to less, not more, pollution.
C. the market mechanism mobilizes resources to deal with shortages.
D. global environmental problems are not handled by markets or national governments.
Answer: D
Difficulty: 01 Easy
Topic: Are There Limits to Growth
Blooms: Remember
Feedback: Global environmental problems, like climate change, are not handled well by markets
because externalities exist. There is no global body today that can efficiently control externalities
such as pollution.
160. Arguments that economic growth must be constrained by environmental problems and
limits of natural resources ignore the fact that economic growth can:
A. be measured in both nominal and real terms.
B. increase both average labor productivity and the share of population employed.
C. take the form of improved quality as well as increased quantity.
D. occur with only benefits and no economic costs.
Answer: C
Difficulty: 01 Easy
Blooms: Remember
Feedback: Making more fuel-efficient cars that cause less pollution counts as economic growth
even if the number of goods is the same. Economic growth can be reflected in quality
improvements as well as quantity increases.
161. Empirical studies suggest that as real GDP per person increases the level of pollution:
A. increases.
B. decreases.
C. remains constant.
D. first increases then decreases.
Answer: D
Difficulty: 01 Easy
60
Blooms: Remember
Feedback: When countries first industrialize there is often considerable pollution. However when
countries get richer, they value quality of life more than before and tend to reduce pollution.
162. Arguing that economic growth will eventually stop because we will run out of natural
resources:
A. must be correct because scarcity exists.
B. will only be correct if growth takes the form of newer, more efficient goods and services.
C. ignores the power of markets to recognize shortages and induce changes in behavior.
D. is supported today by the fact that richer countries have fewer natural resources.
Answer: C
Difficulty: 01 Easy
Blooms: Remember
Feedback: Those who believe there are limits to economic growth tend to worry that the world is
running out of natural resources. However, past experiences seem to suggest that markets will
adjust to shortages as the recent shale oil boom in the United States show.
163. Empirical studies indicate that the maximum amount of air pollution occurs ______ levels
of real GDP per person.
A. at the highest
B. at the lowest
C. at “middle-income”
D. equally at all
Answer: C
Difficulty: 01 Easy
Blooms: Remember
Feedback: Middle-income countries, like Mexico, are between the rich industrialized countries
and the abject poor countries. Middle-income countries tend to have pollution problems because
they are developed enough for industry but not rich enough to afford clean air and waterways.
164. Defenders of limits on economic growth are concerned that continued economic growth will
eventually:
A. raise interest rates.
B. reduce the rate of technological progress.
C. exhaust natural resources.
61
D. make plant and equipment obsolete.
Answer: C
Difficulty: 01 Easy
Blooms: Remember
running out of natural resources.
165. Critics of the "limits to growth" thesis argue that:

A. economic growth will always take the form of more of what we have now, rather than newer,
better, and cleaner goods and services.
B. the market is not capable of adjusting to shortages of resources.
C. clean air and water is a luxury good and the more economically developed a country becomes
the easier it will be to keep the environment clean.
D. government action spurred by political pressure is the best way to avoid the depletion of
natural resources and pollution of the environment that results from economic growth.
Answer: C
Difficulty: 01 Easy
Blooms: Remember
running out of natural resources.
62
Another random document with
no related content on Scribd:
“I’ll explain,” he said. “I was reading in my study, shortly after
eleven this evening, when this man walked in. He threatened me
with a revolver, making some remark which I did not understand. I
am not a young man, but I have led a hard life, and I did not hesitate
to grapple with him. He is very strong, however, and he managed to
hit me with the butt of the revolver. I remember nothing more until the
time when I came to and found him rifling my desk. Since he was
armed, and had already beaten me once in a hand-to-hand tussle, I
pretended to be still unconscious. He searched the room minutely,
but apparently failed to find whatever it was he was looking for.
When he left I followed him, and traced him here. Then I went and
fetched Hopkins. That is the complete story.”
“Anjew better come along quietly,” advised the policeman,
tightening his grip on the Saint’s shoulder and holding his truncheon
at the ready.
“Fine,” said the Saint softly. “I should like to be searched now, so
that your statement about the revolver can be verified.”
Bloem smiled.
“You left it behind,” he said. “Here it is.”
Carn took the weapon from Bloem’s hand and examined it.
“Belgian make,” he said. “Is this yours, Mr. Templar?”
“It is not,” answered Simon promptly. “I object to firearms on
principle. They make such a noise.”
“Come along,” urged the constable, jerking the Saint forward.
Simon was not easily peeved, but one thing that made him see red
was anybody trying to haze him. For a second he forgot his saintly
pose. He caught the policeman’s wrist with both hands and twisted
like an eel. There was a flurry of arms and legs, a yell, and George
Hopkins landed with a crash on the other side of the room, with most
of the breath knocked out of him.
The Saint straightened his tie, and looked bang into the muzzle of
an automatic in Bloem’s hand, but that he ignored.
“Anyone who wants a quiet life is advised to keep their filthy hands
off me,” murmured the Saint. “Don’t do it again, son.”
The constable was getting shakily to his feet.
“That’s assaulting the police,” he stormed.
“Oh, don’t be childish,” drawled the Saint, cool again. “When we
want your little chatter we’ll ask for it. Just now, Bloem, we’ll argue
this out by ourselves. We can soon smash this cock-and-bull yarn of
yours. One: were you alone in the house?”
“I was.”
“Where was Algy?”
“He’d gone over to see Miss Holm.”
That knocked the bottom out of a neat little alibi that the Saint had
thought of trying to put over, but he did not show his disappointment.
“Two: didn’t anyone follow me here with you?”
“I refuse to be cross-examined. I’ve told you I was alone——”
“You’re talking,” said the Saint coldly. “Don’t. Be a good boy and
just answer when you’re spoken to. And the point is, if you’ve been
quite alone all this time, as you say you have, what’s your word
against mine? Suppose I say I called in for a chat, and you stuck me
up with that gun and tried to pinch my watch? Why shouldn’t you be
run in yourself?”
“Let ’im tell that to the judge,” growled the constable.
“I think,” said Bloem acidly, “that my reputation will survive your
wild accusations.”
The Saint was not impressed.
“We had a stand-up fight, did we?” he went on. “I grant you I look
as if I’d been in some rough stuff. Now suppose you take off that
mac and let’s see how you came out of it.”
Bloem smiled, a little wearily, and unbuttoned his coat. The Saint’s
lips tightened. Bloem certainly had a convincing air of having been
violently handled, and that put the Tiger another point to the good.
Simon saw the Tiger’s score soaring skywards at an alarming rate,
but the only effect of that was to key up his own nerves, while his
easy and confident manner never faltered. There were still a few
more minutes to play.
“It’s rather hopeless, isn’t it?” said Bloem.
He was appealing to the audience, and the constable grunted his
agreement.
“What was this remark you didn’t understand?” asked Carn.
“When he—as you say—threatened you with the revolver.”
“It was most mysterious,” said Bloem. “He said: ‘I’m looking for the
tiger’s den, and I think I’m getting warm.’ I still can’t make out what
he meant.”
Simon fished out his cigarette-case and began to tap a cigarette
thoughtfully on his thumbnail. Apparently bored with the whole
proceeding, he nevertheless saw Carn’s face become a mask. Out
of the corner of his eye he caught sight of Bloem, and the Boer’s
bland demeanour almost took his breath away. The colossal
audacity of that last statement was the crowning stroke to a truly
masterly bluff. The Saint wondered if Carn himself was suspect, but
Bloem’s gaze rested only on the Saint. No—the gang knew nothing
about Carn’s real profession. Bloem was simply taking a vindictive
pleasure in kicking the man whom he thought he had got where he
wanted him.
And it looked dangerously as if he had got the Saint tied hand and
foot and gagged. Patricia could not help him, and Carn could not—
even if he cared to. It was Bloem’s word against Simon’s, and there
was no doubt which the Bench would prefer to accept. And Bloem
knew that the Saint knew that any reference to the evening’s
entertainment at Bittle’s would be futile. Bittle would lie like a Trojan,
and the Tiger was sure to have provided him with a plausible
explanation of the noise that had occurred earlier that night.
The Saint grasped the consummate efficiency of the Tiger’s
tactics. Simon was to be shopped, and the shopping had been slickly
done. He would be lucky to get away with six months hard—and
taken in conjunction with the assault upon the police in the execution
of its duty the whole charge-sheet might well put the Saint behind
bars for upwards of a year. And in that time T. T. Deeps could be
salted, and the Tiger Cubs could fade gracefully away. The Saint
lounged even more languidly against the mantelpiece. This last deal
had certainly given the Tiger one Hades of a hand.
Yet indisputably the Saint dominated the situation. They were all
waiting for him. Bloem, watching him through narrowed lids, and still
training the automatic upon him, was utterly confident of the strength
of his combination. He was just waiting for the Saint to confess
defeat. The constable, more wary after his taste of the Saint’s anger,
was hanging about in the background waiting for somebody else to
start the next dance. Patricia was looking anxiously at the Saint,
powerless to help him, and wondering if any daring sideslip was
being planned behind that lazy exterior. The one certain thing was
that she did not believe Bloem’s story for an instant. At any other
time she might have credited it, but seen in the light of previous
events that evening it savoured of nothing but the complicated web
of mystery which had caught her up in its meshes and which
threatened her Saint with the most sinister things. And Carn had
nothing to say. As far as Bloem’s story was concerned, it might or
might not be true—his knowledge of the Saint inclined him to believe
it. But in any case the Saint was working against him, even if he was
also working against the Tiger. And to have disclosed himself as
Central Detective Inspector Carn of Scotland Yard would have
written Finis to every chance he had of succeeding on his mission.
“We’re waiting,” said Bloem at last.
“So I see,” drawled Simon. “If you can wait a bit longer, there are
just one or two more points to clear up. The first is that I’m sure you
won’t mind the Doctor just examining the bump I must have raised
on your cranium when I knocked you out.”
He was watching Bloem closely as he spoke, and his heart sank
when he saw that the man was not at all put out. Carn walked up to
Bloem with a query, and Bloem nodded.
“Just behind my left ear,” he said.
“Sweetest lamb,” said the Saint through his teeth, “I’ll bet you just
hated getting that bit of realism!”
Carn looked at the Saint and shrugged.
“Someone certainly hit him very hard,” he said. “Saint, you’ve put
your foot in it this time.”
“So I don’t think we’ll prolong this unpleasant duty,” said Bloem
briskly. “Constable—you have the handcuffs? I’m covering him, and I
shall shoot if he attacks you again.”
And then the congregation was increased by one, for a man
strutted out of the darkness and stood framed in the open window.
“ ’Ere, wassal this?” demanded Orace truculently.
Chapter VIII.
The Saint is Dense
Bloem wheeled with a smothered exclamation, for the interruption
came from behind him. Then the Boer slowly lowered his automatic
—because Orace was carrying the enormous revolver which was his
pride and joy, and that fearsome weapon was waving in a gentle
semicircle so that it covered everyone in the room in turn. Orace
leaned on the windowsill, well pleased with the timeliness of his
entrance and the sensation it had caused.
“Snoldup,” declared Orace brightly. “Ni jus’ come in the nicker
time. Looks like a dangerous carrickter, too. Orfcer,” said Orace, with
a lordly sweep of his free hand, “you ’ave the bracelets. Do yer
dooty!”
“My good fellow——”
Orace waggled the blunderbuss threateningly in Bloem’s direction.
“Lay orf ‘me good fellerin’ ’ me!” commanded Orace ferociously.
“Caught in the yack, that’s wot you are, an’ jer carn’t wriggle out av it!
Constible! Wot the thunderin’ ’ell are yer wytin’ for? Look slippy an’
clap the joolry on ’im! An’ jew jusurryup an’ leggo that popgun, or I’ll
plugua!”
Bloem let the automatic fall, and the Saint picked it up, in case of
accidents.
“I can explain,” persisted Bloem.
“Corse yer can,” agreed Orace scornful. “Never knew a crook ’oo
couldn’t.”
“Oh, but he can,” said the Saint. “You can stop flourishing that
cannon, Orace, and come right in. I was just wondering how to get
hold of you.”
Orace looked doubtful, but eventually he obeyed, clambering
lamely over the sill and treating Bloem to a menacing glare as he did
so.
“Yessir?”
“A simple case of mistaken identity,” remarked the Saint to the
assembled company, in the manner of counsel opening the defence.
“But Mr. Bloem was so very obstinate. . . . Well, this is Orace, late of
His Majesty’s Royal Marines, and my servant for years. Orace will
now testify that I reached home just after eleven, and didn’t leave
again until about twenty to twelve.”
The Saint did not even look at Orace as he spoke, for he knew his
man. Carn, however, did, and saw Orace register surprise.
“Tha’s so,” said Orace. “ ’Oo said yer didn’t?”
“You see,” Simon explained, “Mr. Bloem there was held up by an
armed man to-night, and he had the idea that it was me, so he’s
been trying to arrest me.”
Orace nodded, tilting his head away from Bloem as if the man
offended his nostrils.
“Ar,” said Orace derisively. “The idea!”
The Saint turned to Bloem.
“Perhaps you will now apologise?” he suggested. “Come, Mr.
Bloem, admit that you didn’t get a good view of your assailant, and
for reasons of your own you jumped to the conclusion that it was me.
He might even have been masked. . . .”
The two men’s eyes met. There was no misconstruing the Saint’s
meaning. He was offering Bloem a graceful retreat. Bloem knew that
he had weakened his case by confessing that no one but himself
had seen the bandit, and his story would never hold water in the face
of Simon’s alibi. Orace was the one factor which the Tiger, by some
incomprehensible oversight, had utterly overlooked. It might even be
said that only Orace’s arrival at that precise moment made him a
factor to be considered: if any time had elapsed between the arrest
and its coming to Orace’s ears, Orace might by then have been
trapped into admitting that he had not seen the Saint since dinner,
and possibly the Tiger had banked on some such manœuvre. But
Orace had turned up just when he was wanted, which he had an
uncanny gift for doing, and thereby he had upset the Tiger’s
applecart irretrievably.
And Bloem knew it. He did not show it with a muscle of his face,
but his eyes glowed venomously. And the Saint, smiling a little,
gazed back with a little blue devil of unholy glee dancing about just
behind his lazily lowered lids. For the Saint was thinking of the
whack behind the ear which Bloem had suffered for the good of the
cause, and that thought made his ribs ache with noiseless
laughter. . . .
“I am deeply humiliated,” said Bloem in a strangled voice. “As a
matter of fact, the man was masked. I let him leave the room, and
then followed. When I came out of the garden, I saw Mr. Templar
walking away, and immediately concluded that it was he. The real
man must have gone off in another direction. I apologise.”
“I accept your apology, Mr. Bloem,” said the Saint stiffly. “Don’t let
it occur again.”
His dignity was terrific, and for that shrewd cut he was rewarded
with a look from Bloem which ought by rights to have made him
vanish in a puff of smoke, leaving a small greasy stain on the carpet,
but the Saint’s armour was impregnable.
“I’m very sorry, Doctor,” said Bloem unevenly. “Try to forgive me,
Miss Holm. I’d better go.”
The Saint stepped up with the automatic.
“You might need this, with a hold-up man in the neighbourhood,”
he murmured mockingly. “If you meet him again, I trust you will not
spare the lead.”
Bloem gazed back malignantly.
“You need have no fear of that, Mr. Templar,” he replied.
He was just going out when Mr. Hopkins awoke to the realisation
that he had been cheated of the glory of arresting an armed
desperado, and that this coolly smiling man who, was getting off
scot-free had flung him across the room, bruised and shaken him
severely, and nearly broken his arm.
“ ’Ere,” said the constable, whose idiom was much the same as
that of Orace, “wassal this? Whatever you say, that don’t dispose of
the charge of assaultin’ the police.”
“When an innocent man is treated like a criminal,” said Simon
virtuously, “he may be pardoned for losing his temper. I’m sure Mr.
Bloem will agree with me? . . . In fact,” added the Saint, taking Mr.
Hopkins coaxingly by the arm, “I’m sure that if you mentioned the
matter to Mr. Bloem, he’d stand you a glass of milk and put a penny
in your money-box. Wouldn’t you, Mr. Bloem?”
“Naturally,” said Bloem, without enthusiasm, “naturally I must
accept the responsibility for that.”
“Spoken like a gent,” approved the Saint. “Now toddle along and
talk big business under the stars, like good children.”
And he urged Bloem and the constable towards the door. They
went obediently, for different reasons. It was a victory that the Saint
could not help rubbing in.
He slammed the front door on the pair, and returned hilariously.
“Honour is vindicated, mes enfantes,” he said happily. “What about
splitting another lemonade on it, Carn?”
The detective looked at the Saint and nodded slowly.
“I think we might,” he assented. “Such luck ought to be celebrated.
I suppose it would be indiscreet to ask how Orace came to arrive so
fortunately?”
“But why indiscreet?” cried the Saint. “All’s fair and above board.
Orace, tell the gentleman how you happened to blow in on your cue.”
Orace cleared his throat.
“Being accustomed to take a constitooshnal,” he began, in the
stilted language which he would have employed before his orderly
officer, “I’m in the ’abit of walking this wy of a nevenin’; and the
winder bein’ open an’ me ’avin’ good eyesight——”
“Of course I believe you,” said Carn. “You deserve to be believed.
There’s some whisky in the kitchen, Orace.”
Orace saluted and marched out, and the Saint doubled up with
silent mirth.
“Orace is unique,” he said.
“Orace is all that, and then some,” Carn returned ruefully.
Soon afterwards Simon and Patricia left. They walked the short
distance to the Manor without speaking, for the Saint was enjoying
the novel experience of finding his flow of small talk entirely dried up.
He had thought of nothing to say until the girl was opening the door,
and then he could only make a postponement.
“May I see you to-morrow morning?” he asked.
“Of course.”
“I’ll come right after breakfast.”
Suddenly she remembered Agatha Girton.
“I think—would you mind if I came over to you instead?”
“I’d love you to. And if I haven’t bored you to tears by then, you
can stay for lunch. Tell me what time you’ll be leaving, and I’ll send
Orace over to fetch you.”
She was surprised.
“Is that necessary?”
“Very necessary,” replied the Saint gravely. “Tigers have nasty
suspicious minds, just like me, and by this time one Tiger is
wondering just how dangerous you are, Pat. Yes, I know it’s
screamingly funny, but let me send Orace—for my own peace of
mind.”
“Well—— About half-past ten, if you like.”
“I do. And Orace will adore it. One other thing. Will you do me a
great favour?”
She had found the switch in the hall, and she turned on the light to
see his face better, but he was not joking.
“Lock your door, and put the key under the pillow. Don’t open to
anybody—not even your aunt. I don’t really think anything’ll happen
so soon, but Tigers can hustle. Will you?”
She nodded.
“You’re very alarming,” she said.
“I’m full of ideas to-night,” he said. “I’ve had a taste of the Tiger’s
speed, and nobody ever stung the Saint in the same way twice.
Don’t believe any messages except they’re brought by Orace. Don’t
trust anybody but me, Orace, or old Carn at a pinch. I know it’s a tall
order, but there are one or two rough days—not to mention rough
nights—in store for the old brigade. You’ve been perfectly marvellous
so far. Can you keep it up?”
“I’ll try,” she said.
He took her hand.
“God bless you, Pat, old pal.”
“Saint——”
He was going when she stopped him. It was odd to hear that
nickname fall from her lips—the name wherewith the Saint had been
christened in strange and ugly places, by hard and godless men. He
had grown so used to it that he had come to accept it without
question, but now the sound of it brought a flood of memories. Once
again he stood in the Bosun’s smoky bar at the back of Mexico City,
looking from the huddled corpse of Senhor Miguel Grasiento to the
girl called Cherry, and heard the rurales pounding on the door. He
had got her away, on an English tramp bound for Liverpool. “ ‘Saint,’ ”
she had said—“that was a true word spoken in jest.” And he had
never heard the name uttered in the same tone since until that
moment. . . .
“Saint, did you really go to Bloem’s?”
“I did not,” he answered. “That was a frame-up. But Mynheer
Bloem is certainly one of the Tiger Cubs. Watch him! I’ll tell you the
whole yarn to-morrow. Bye-bye, kid.”
The Saint found Orace in the lane, curled up under the hedge,
philosophically smoking his pipe.
“We’ll work inland round the village,” said Simon, “I’m hoping the
Tiger’s had enough for one night, but you never know. Nobody’s got
any proof that Bloem was lying about that hold-up merchant, except
me, and a fairy tale like that cuts both ways. If our bodies were found
in a field in the morning, the whole thing’d fit in beautifully.”
Nevertheless, they were not molested on the way back—a fact
which might well have been due to the Saint’s foresight. It took an
hour of the Saint’s killing pace to do the journey which would have
lasted only fifteen minutes by the obvious route, and even then
Simon was not satisfied.
When the outline of the Pill Box loomed dimly up against the dark
sky, he stopped.
“Booby traps have caught mugs before now,” he murmured. “Just
park yourself in the nettles here, Orace, while I snoop round.”
The Saint could have given most shikars points when it came to
moving across country without being noticed. Orace simply saw a tall
shape melt soundlessly away into the gloom, and thereafter could
trace nothing until the tall shape materialised again beside him.
“All clear,” said Simon. “That means our Tiger’s burning the
midnight oil thinking out something really slick and deadly.”
The Saint was right. Although he and Orace never relaxed their
vigilance, taking it in turns to sleep and keep watch, they were left in
peace. The Tiger had taken one blind shot, and it had not come off.
Moreover, if his organisation had been only a shade less thorough, it
might have landed him in the tureen. As it was, he had come out of
the encounter none too well. And for the future he intended to have
his moves mapped out well in advance, with every possible set-back
and development legislated for.
None of these reflections disturbed the Saint’s sleep. He had
taken the first watch, and so the sun was shining gaily through the
embrasures when he awoke for the second time, to find Orace
setting a cup of tea down by his bedside.
“Nice morning,” remarked Orace, according to ritual, and vanished
again.
Since the episode of the bullet out of the blue, Simon had
reluctantly decided to forgo his morning dip until the air had become
clearer. However, he skipped and shadow-boxed in the sun with
especial vigour, and finished up with Orace splashing a couple of
buckets of water over him, what time the Saint lay on the grass
drawing deep grateful breaths and blessing his perfect condition. For
the Saint saw a fierce and wearing scrap ahead, and he reckoned
that he would need all his strength and stamina if he was going to be
on his feet when the gong clanged for the last round.
“Brekfuss narf a minnit,” said Orace.
The Saint was grinning as he dressed. Orace was nearly too good
to be true.
They were late that morning, and Orace left to fetch Patricia as
soon as he had served “brekfuss.” The girl arrived in half an hour, to
find the Saint spread-eagled in a deck chair outside the Pill Box. He
had managed to unearth another pair of flannel bags and another
shooting-jacket that were nearly as disreputable as the outfit which
had been wrecked in Bittle’s garden the night before, and he looked
very fresh and comfortable, for his shirt, as usual, would have put
snow to shame.
He jumped up and held out both his hands, and she gave him both
of hers.
“I haven’t seen you for ages,” he said. “How are we?”
“Fine,” she told him. “And nothing happened.”
She was cool and slim in white, and he thought he had never seen
anyone half so lovely.
“Something might have,” he said. “And when I was a Boy Scout
they taught me to Be Prepared.”
He rigged a chair for her and adjusted the cushions, and then he
sat down again.
“I know you’re bursting with curiosity,” he said, “so I’ll come
straight to the ’osses.”
And without further ado he started on the long history. He told her
about Fernando, dying out in the jungle with a Tiger Cub’s kris in
him, and he told her Fernando’s story. He told her about the Tiger,
who was for years Chicago’s most brilliant and terrible gang leader.
He told her about some of the Tiger’s exploits, and finally came to
the account of the breaking of the Confederate Bank. Some of the
details Fernando had told him; the rest he had gathered together by
patient investigation; the accumulation worked up into a plot hair-
raising enough to provide the basis of the wildest film serial that was
ever made.
“The Tiger’s very nearly a genius,” he said. “The way he got away
with that mint of money and carted it all the miles to here is just a
sample of his brain.”
Then he told her about the more recent events—the little he had
learned while he had been in Baycombe. How he had been
suspected from the day of his arrival, and how he had done his best
to encourage that suspicion, in the hope that the other side would
give themselves away by trying to dispose of him. Gradually the lie
of the land took shape in her mind, while the Saint talked on, putting
in a touch of character here and there, recalling points that he had
omitted and referring to details that he had not yet given. The story
was not told smoothly—it rattled out, paused, and rattled on again,
decorated with the Saint’s typical racy idiom and humorous egotism.
Nevertheless, it held her, and it was a convincing story, for the Saint
had a gift for graphic description. She saw the scenes at which she
had been present in a new light.
He ended up with a flippant account of the sport chez Bittle after
he had helped her get away.
“And there you have it,” he concluded. “Heard in cold blood, with
the sun shining and all that, it sounds preposterous enough to make
dear old Munchausen look like gospel. But you’ve seen a bit of it
yourself, and perhaps that’ll make it easier for you to believe the rest.
And what it boils down to is that the Tiger is in Baycombe, and so am
I, and so are the pieces of eight; and the Tiger wants my head on a
tin tray, and I want his ill-gotten gains, and we’re both pretty keen to
hang on to our respective possessions. So, taken by and large, it
looks like we shall come to blows and other Wild and Woolly
Western expressions of mutual ill-feeling. And the point is, Pat, and
the reason why I felt you had a right to know all the odds—is that
you’ve gone and cut in on the game. By last night, the Tiger had to
face the risk that I might have talked to you, and the way you
behaved generally won’t have eased his mind any. You might be a
danger or you might not, but he can’t afford to take chances. To be
on the safe side, he’s got to assume that you and I are as thick as
thieves. So you see, old soul, you’re slap in the middle of this here
jamboree, whether you like it or not. You’re cast for second juvenile
lead in the bloodcurdling melodrama now playing, and your name’s
up in red lights all round the Tiger’s den—and the question before
the house is, What Do We Do About It?”
He was leaning forward so that he could see her face, and she
knew that he was desperately serious. She knew, also, instinctively,
that he was not a man to exaggerate the situation, however much he
might play the buffoon in other directions.
“Now, here’s my suggestion,” said the Saint. “I know a bloke called
Terry Mannering, who lives on the other side of Devonshire, and he
can deal with fun and games as well as I can. He has a wife, whom
you’ll love, and a very good line in yachts, being nearly as rich as I
should like to be since his Old Man kicked the bucket. If I took you
over and told Terry that it’d be good for all your healths if you went
cruising off to the West Indies or somewhere else a long way off for a
few months, till the tumult and the shouting dies, so to speak, and
the Tigers and their Cubs depart—well, I know the three of you’d be
on the high seas in no time. And the Tiger and I would be rude to
each other for a bit, and when it was all over and he was decently
buried I’d let you know and you could come back. What about it?”
Patricia studied her shoe; and she said, in a very Saintly way:
“What, indeed?”
“You said?” rapped Simon.
“What about it?” queried Patricia. “It might be rather a good idea
some time, but you can’t rush it like that. Besides, I’m rather enjoying
myself in Baycombe.”
Simon got up.
“Well, I’m not enjoying your enjoyment,” he said bluntly. “That sort
of courage is all very fine when it’s to some purpose—but this time it
isn’t. I’ve never dragged a woman into my little worries yet, and I’m
not starting now. Perhaps you think this is going to be a picnic. I
thought I’d made it plain enough that it isn’t. If you want to pack a
few thrills into your young life, I’ll arrange a big-game shooting trip, or
something else comparatively tame, later. But this particular spree is
not in your line one bit, and you’d better be sensible and admit it.”
Patricia raised her eyebrows.
“So I gather you propose to kidnap me,” she said calmly. “I believe
‘shanghai’ is the word. Well, I should start planning right away—
because nothing short of that is going to move me.”
“You’re a damned fool,” said the Saint.
She laughed, standing up to him and laying a hand on his
shoulder.
“Dear man,” she said, “I refuse to lose my temper, because I know
that’s just what you want me to do. You think that if you’re rude
enough I’ll dash off and leave you to stew. And I can promise you I
shan’t do anything of the sort. I know it isn’t going to be a picnic—but
I’m sorry if you think I’m a girl that’s only fit for picnics. I’ve always
fancied myself as the heroine of a hell-for-leather adventure, and this
is probably the only chance I shall ever have. And I’m jolly well going
to see it through!”
Simon held himself in check with an effort. He had a frantic
impulse to take this stubborn slip of a girl across his knee and spank
some sense into her; and coincidently with that he had an equally
importunate desire to hug her and kiss her to death. For there was
no doubt that she was determined to ride on to the kill, however
dangerous the country her obstinate intention led her over. Why she
should be so set on it beat the Saint. He could imagine a high-
spirited girl fancying herself as the heroine of just such an adventure,
but he had never dreamed of meeting a girl who’d go on fancying
herself quite so keenly when it came to the point, and when she’d
had a peek at some of the stern and spiky disadvantages. But there
she was, smiling into his eyes, tranquilly announcing her resolution
to see the shooting-match through with him, and boldly averring that
she was perfectly prepared to eat the whole cake as well as the
icing. She was going to be the blazes of a nuisance and the mischief
of a worry to him—“But, Hell!” swore the Saint to himself—“I’m darn
glad of it!” Wherein he betrayed his egotism. It would be a gruelling
test for her, but he’d have her with him all the time. And if she came
through it with flying colours, well, maybe after all he’d go the way of
most confirmed bachelors. . . .
And since he saw that neither cajoling nor cursing would budge
her, he accepted the situation like a wise man. And even then (with
such an inferiority complex is Love afflicted) the sublime egotist did
not spot the foundation of her determination, though it stuck out a
mile. Nevertheless, in his blindness he was very near to blundering
straight into the heart of the affair. His scowl relaxed, and he took her
hand from his shoulder and held it.
“I’ve known some fool women,” said the Saint, “but I never met
one whose foolishness appealed to me more than yours.”
“Then—it’s a bet?” she asked.
He nodded.
“You said it, partner. And the Lord grant we win. It’s not my fault if
you insist on jazzing into the Tiger’s den, but it’ll be my unforgivable
fault if I don’t yank you out again safely. Shake!”
“Bless you,” said Patricia softly.
Chapter IX.
Patricia Perseveres
“Well,” remarked Simon Templar, breaking a long silence as lightly
as he could, “where do we go from here, old Pat?”
She disengaged her hand and sat down again; and he shifted his
own chair round so that they were knee to knee. She was chilled by
the definiteness with which he reverted to pure business, though
later she realised that he did so only because he was afraid of letting
himself go, and possibly incurring her displeasure by forcing the
pace.
“I’ve also a story to tell,” she said, “and it came out only last night.”
And she gave him a full account of Agatha Girton’s confession.
For such a loquacious man, he was an astonishingly attentive
listener. It was a side of his character which she had not seen before
—the Saint concentrating. He did not interrupt her once, sitting back
with his eyes shut and his face so composed that he might well have
been asleep. But when she had finished he was frowning
thoughtfully.
“Curiouser and curiouser,” said the Saint. “So Aunt Aggie is one of
the bhoys? But what in the sacred name of haggis could anyone
blackmail Aunt Aggie with? Speaking quite reverently, I can’t imagine
she was ever ravishing enough, even in her prime, to acquire
anything like a Past.”
“It does seem absurd, but——”
The Saint scratched his head.
“What do you know about her?”
“Very little, really,” Patricia replied. “I’ve sort of always taken her for
granted. My mother died when I was twelve—my father was killed
hunting three years before that—and she became my guardian. I
never saw much of her until quite recently. She spent most of her
time abroad, on the Riviera. She had a villa at Hyères. I stayed on at
school very late, and I was generally alone here during the holidays
—I mean, she was away, though I usually had school friends staying
with me, or I stayed with them. She didn’t do much for me, but my
bills were paid regularly, and she wrote once a fortnight.”
“When did she settle down in Baycombe, then?”
“When she came back from South Africa. About six years ago I
had a letter from her from Port Said, saying that she was on her way
to the Cape. She was away a year, and I hardly had a line from her.
Then one day she turned up and said she’d had enough of travelling
and was going to live at the Manor.”
“And did she?”
“She used to go abroad occasionally, but they were quite short
trips.”
“When was the last expedition?”
She pondered.
“About two years ago, or a bit less. I can’t remember the exact
date.”
“Now think,” suggested the Saint—“roughly, you hardly saw her at
all between the time she introduced herself as your guardian, when
you were twelve, until she came back from South Africa, when you
were sixteen or seventeen.”
“Nearer seventeen.”
“And in that time anything might have happened.”
She shrugged.
“I suppose so. But it’s too ridiculous. . . .”
“Of course it is,” agreed Simon blandly. “It’s all too shriekingly
ridiculous for words. It’s ridiculous that our Tiger should have broken
the Confederate Bank of Chicago and lugged the moidores over to
Baycombe to await disposal. It’s ridiculous to think that there are
some hundredweights of twenty-two carat gold hidden somewhere
not two miles from here. But there are. What we’ve got to assume is
that on this joy ride nothing is too ridiculous to be real. Which
reminds me—what do you know about the old houses in Baycombe?
There must be something conspicuously old enough for Fernando to
have thought The Old House was sufficient address.”
He was surprised at her immediate answer.
“There are two that’d fit,” she said. “One is just out of the village,
inland. It used to be an inn, and the name of it was The Old House.
It’s falling to bits now—the proprietor lost his licence in the year Dot,
and nobody took it over. It’s supposed to be haunted. The windows
are all boarded up, and a dozen men could live there without being
seen if they went in and out at night.”
The Saint smashed fist into palm, his eyes lighting up.
“Moonshine and Moses!” he whooped. “Pat, you’re worth a fortune
to this partnership! And I was just thinking we’d come to a standstill.
Why, we haven’t moved yet! . . . What’s the other one?”
“The island just round the point.” She waved her arm to the east.
“The fishermen call it the Old House, but you wouldn’t have noticed it
because it only looks like that from the sea. The sides are very
steep, and on one side it juts right out over the water, like those old
houses where the first floor is bigger than the ground floor.”
Simon jumped up and walked to the edge of the cliff, so that he
could see the island. It was about a mile from the shore—nothing but
an outcrop of rock thickly overgrown with bushes and stunted trees.
He came back jubilant.
“It might be either,” he said exultantly, “or it might be both—the
Tiger may have a home from home in your defunct pub, and he may
have parked the doubloons on the island. Anyway, we’ll draw both
covers and see. Thinking it over, I guess I’ve hit it. The Tiger’d want
to have the gold in some place he could ship it from easily—
remember it’s got to go to Africa. And by the same token . . . Here,
hold on half a sec.”
He disappeared into the Pill Box and came back in a moment with
field-glasses. Then he focused on the horizon and began to sweep it
carefully from west to east. He had covered three-quarters of the arc
when he stopped and stared for a full minute, suddenly rigid.
“And there she blows,” he muttered.
He handed her the binoculars and pointed north-east.
“See what you make of it.”
“It looks like a couple of masts sticking up.”
“Motor ship—no funnels,” he explained. “The Bristol shipping
passes here, but we’re back in a sort of big bay, and I don’t think
they’d stand in as near as that. But we’ll just make sure.”
He took the glasses from her again and went into the Pill Box, and
she followed. He fossicked about in the kitchen till he found a piece
of board, the remains of a packing-case, and this he settled in one of
the embrasures, truing it up level with little wedges of newspaper.
Then he put the field-glasses on it and took a sight on one of the
masts by means of a couple of pins stuck in the board.
“We’ll give her five minutes.”
She grasped his meaning at once.
“You think they’re waiting to come in after dark?”
“No less. Comrade Bloem hasn’t done all he’d like to with T. T.
Deeps, but he’ll have some weeks’ grace while the stuff’s getting to
the mine. And he daren’t let it lie around here any longer, in case my
luck holds and I don’t get bumped off according to schedule. I’ve
rattled the Tiger!”
He was keeping an eye on his watch, and the minutes ticked away
very slowly.
“Is Dr. Carn a detective?” she asked.
“That’s hit it in one,” affirmed the Saint. “But don’t let on you know.
It wouldn’t be sporting not to give the old boy a fair run.”
“Then aren’t you a detective?” she stammered in bewilderment. “I
thought you were friendly rivals—that was the only explanation I
could work out last night.”
The Saint smiled grimly.
“Rivals—more or less friendly—yes,” he said. “But I’m not a
detective, and never was. I’m playing for my own hand, with an
enormous quantity of ha’pence coming to me if I win, and
everybody’s kicks if I lose. Profession, gentleman adventurer: i.e.,
available for any job involving plenty of money and plenty of trouble,
suitable for a man who doesn’t bother much about the letter of the
law and who’s prepared to take his licking without a yelp if he gets
landed. That’s me. Like this. I happened to find Fernando, and as
soon as I’d got the thing taped out I took a trip to Chicago and saw
the boss of the Confederate. ‘Here’s nearly a year since your strong
room was busted,’ I said, ‘and the dicks haven’t brought you back
one cent of the almighties. Now suppose you let me have a shot.
Terms, twenty per cent. commission if I bring it off. Not a bean if I
don’t. Me to work on my lonesome, without reporting to anybody, and
to take all the blame if I’m run over.’ Well, that put them on
something to nothing, so they bit. And there you are.”
He was looking steadily at her, but she did not change colour. But
the Saint was never a faker, and this was his call to clean the whole
sheet, so that she could take it or leave it as she chose and would
never be able to say he hadn’t played square. He rubbed it in with
brutal directness.
“That’s the way I’ve lived for years. Pretty well, all things
considered, so that if this gamble turns up I’ll be able to retire and
settle down as soon as I like, and not have to stint myself anywhere.
In those years I’ve committed about half the crimes in the Calendar,
at the expense of crooks. It’s a sporting game—man to man, and
devil take the mug: and the police, for obvious reasons, aren’t invited
to interfere by either side. Bloem’s the first to break that rule; but the
Tiger isn’t a sportsman—he’s just a pot-hunter. Still, I doubt if your
friends would appreciate my success in that career. D’you still want
to be a partner in the firm?”
She sighed.
“Saint, you’re an ass,” she said. “And if you exhibit any symptoms
of virulent imbecility I shall fire you and become managing director
myself.”
“Hell’s bells,” ejaculated Simon, unwontedly moved, and swung
away.
Very carefully, so as not to disturb the board, he took another sight
at the ship’s masts; and presently he straightened up with a light of
triumph breaking on his face.
“We’re in luck,” he said. “She hasn’t shifted a millimetre. Rotten
bad navigation. I’d have known the height of my masts to an inch,
and the height of the cliffs here ditto, and I’d have figured out my
position to six places of decimals. . . . But the Tiger’s loss is our
gain!”
“They’ll start to come in at sunset,” she took him up excitedly. “And
——”
“And I’ll be there,” said the Saint. “It’s a moonlight swim for me to-
night. That’s great—to let the Tiger Cubs themselves lead me to the

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5. Growth in real GDP per capita has:

6. The rise in average living standards experienced by most industrialized countries:

8. Compound interest is:

29. Real GDP per person equals average labor productivity:

33 Real GDP per person can increase:

Country Population (millions) Average Labor Productivity ($)

Country Population (millions) Average Labor Productivity ($)

Country Population (millions) Average Labor Productivity ($)

Country Population (millions) Average Labor Productivity ($)

50. If average labor productivity increases, real GDP per person:

Country Population (millions) Share of Population Employed

Country Population (millions) Share of Population Employed

Country Population (millions) Share of Population Employed

Country Population (millions) Share of Population Employed

63. Human capital is:

65. Workers should invest in additional human capital as long as the:

66. Which of the following is an example of an investment in human capital?

68. Getting a master’s degree is an example of investing in:

69. Providing workers with on-the-job training will increase:

71. Which of the following is an example of an investment in physical capital?

74. Physical capital is:

Number of (Identical) Machines Total Packages Wrapped

89. Usually an abundance of natural resources ______ average labor productivity.

95. The introduction of new technologies to production is ______ source of productivity

97. Business managers are people who:

106 Well-defined property rights:

111. The establishment of well-defined property rights increases:

112. Average labor productivity is determined by:

114. Each of the following increases average labor productivity except:

116. The productivity slowdown of the 1970's occurred:

119. A worldwide slowdown in productivity growth occurred:

129. GDP would be a better measure of economic well-being if it included:

132. Additional economic growth should be pursued when:

136. Higher future living standards require:

138. The major economic cost of growth is:

140. An example of a government policy to increase human capital formation is:

141. An example of a government policy to increase physical capital formation is:

142. An example of a government policy to enhance technological progress is:

148. A government policy of providing free public education is an example of a policy to

156. Research confirms that government provision of infrastructure:

159. Economic growth may face environmental limits because:

165. Critics of the "limits to growth" thesis argue that:

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