Question 1

All else being equal,a permanent decrease in the saving rate in a steady-state economy would cause

Accepted Answer

A)  an increase in the capital-labor ratio and an increase in consumption per worker.
B)  an increase in the capital-labor ratio and a decrease in consumption per worker.
C)  a decrease in the capital-labor ratio and a decrease in consumption per worker.
D)  a decrease in the capital-labor ratio and an increase in consumption per worker.E) B) and C)
F) None of the above

Question 2

Labor productivity increased so much in the second half of the 1990s because of

Accepted Answer

A)  improved information and communications technologies.
B)  higher levels of educational attainment by workers.
C)  cheaper foreign imports used in production.
D)  increased foreign competition.E) B) and D)
F) All of the above

Question 3

A government policy that would raise the rate of productivity growth is

Accepted Answer

A)  shifting infrastructure expenditures to the private sector.
B)  taxing expenditures on research and development.
C)  reducing the government budget surplus.
D)  improving human capital development.E) A) and D)
F) C) and D)

Question 4

In the absence of productivity growth,in a steady-state economy

Accepted Answer

A)  output per worker and consumption per worker remain constant over time.
B)  output per worker remains constant over time,but consumption per worker grows over time.
C)  output per worker grows over time,but consumption per worker remains constant over time.
D)  output per worker and consumption per worker both grow over time.E) All of the above
F) B) and D)

Question 5

In the Solow model,if f(k) = 6k0.5,s = 0.1,n = 0.1,and d = 0.2,what is the value of c at equilibrium?

Accepted Answer

A)  10
B)  10.4
C)  10.8
D)  11.2E) A) and B)
F) A) and C)

Question 6

A government policy that would reduce the saving rate is

Accepted Answer

A)  eliminating the social security system.
B)  giving tax breaks to increase the real return that savers receive.
C)  increasing the government budget surplus by cutting government spending.
D)  switching the tax system to tax consumption instead of income.E) None of the above
F) All of the above

Question 7

Suppose the current level of output is 5000 and the elasticity of output with respect to capital is 0.4.A 10% increase in capital would increase the current level of output to

Accepted Answer

A)  5020.
B)  5050.
C)  5200.
D)  5500.E) A) and C)
F) C) and D)

Question 8

A new pollution law requires businesses to pay for inspections of their plants by independent pollution-monitoring firms.What effect is this likely to have?

Accepted Answer

A)  Increase productivity
B)  Increase the capital stock
C)  Reduce productivity
D)  Increase the demand for labor in those firmsE) B) and D)
F) C) and D)

Question 9

In the Solow model,if f(k) = 2k0.5,s = 0.3,n = 0.05,and d = 0.15,what is the value of k at equilibrium?

Accepted Answer

A)  1
B)  3
C)  6
D)  9E) A) and B)
F) A) and C)

Question 10

The idea that measurement problems could explain the productivity slowdown since 1973 is based on the fact that

Accepted Answer

A)  official output measures make no adjustment for quality.
B)  output can't be measured.
C)  capital can't be measured.
D)  quality improvements aren't fully accounted for in the data.E) A) and B)
F) A) and C)

Question 11

The growth accounting equation is

Accepted Answer

A)   
B)   
C)   
D)   E) B) and D)
F) All of the above

Question 12

If capital and labor each grow 5% in a year,the elasticities of output with respect to capital and labor sum to one,and productivity grows 2% in the year,by how much does output grow during the year?

Accepted Answer

A)  2%
B)  3%
C)  5%
D)  7%E) B) and C)
F) C) and D)

Question 13

The Solow model demonstrates that

Accepted Answer

A)  in the absence of productivity growth,economic growth will turn negative in the long run.
B)  in the absence of productivity growth,economic growth will reach a steady state of zero per-capita growth in the long run.
C)  productivity growth must exceed the rate of growth in the population to avoid a steady state in the long run.
D)  productivity growth will inevitably decline due to diminishing marginal productivity.E) B) and C)
F) None of the above

Question 14

(a)In the model of endogenous growth,if s = 0.1,A = 2,and d = 0.15,calculate the economy's growth rate.Show your work.
(b)If the depreciation rate declines to d = 0.10,calculate the economy's growth rate.Show your work.
(c)Is the impact on the growth rate arising from a change in the depreciation rate in the endogenous growth model the same as in the Solow model?

Accepted Answer

(a)Growth rate = sA - d = (0.1 × 2)- 0.1...

Question 15

The idea that saving equals investment in the Solow model means that a steady state can be reached only when

Accepted Answer

A)  s = k.
B)  s = n + d.
C)  sf(k) = (s + d) k.
D)  sf(k) = (n + d) k.E) A) and B)
F) B) and D)

Question 16

From one year to the next,a country's output rose from 4000 to 4500,its capital stock rose from 10,000 to 12,000,and its labor force declined from 2000 to 1750.Suppose aK = 0.3 and aN= 0.7.
(a)How much did capital contribute to economic growth over the year?
(b)How much did labor contribute to economic growth over the year?
(c)How much did productivity contribute to economic growth over the year?

Accepted Answer

(a)aK ?K/K = 0.3(2000 / 10,000...

Question 17

Government policies to raise the rate of productivity growth include all of the following EXCEPT

Accepted Answer

A)  improving infrastructure.
B)  encouraging research and development.
C)  reducing the government budget surplus.
D)  improving human capital development.E) A) and D)
F) B) and D)

Question 18

Briefly explain the shape of the per-worker production curve in the Solow model.If investment per worker initially exceeds saving per worker,how is the steady state capital-labor ratio achieved?

Accepted Answer

The per-worker production curve is posit...

Question 19

A country has the per-worker production function  
yt = 6,
where yt is output per worker and kt is the capital-labor ratio.The depreciation rate is 0.1 and the population growth rate is 0.1.The saving function is
St = 0.1Yt,
where St is total national saving and Yt is total output.
(a)What is the steady-state value of capital-labor ratio?
(b)What is the steady-state value of output per worker?
(c)What is the steady-state value of consumption per worker?

Accepted Answer

(a)sf(k)= (n + d)k,so 0.1 × 6k...

Question 20

An increase in the saving rate in a steady-state economy would cause

Accepted Answer

A)  a rightward movement along the saving-per-worker curve and an increase in the capital-labor ratio.
B)  an upward shift in the saving-per-worker curve and an increase in the capital-labor ratio.
C)  a downward shift in the saving-per-worker curve and a decrease in the capital-labor ratio.
D)  a leftward movement along the saving-per-worker curve and a decrease in the capital-labor ratio.E) B) and C)
F) None of the above

Exam 6: Long-Run Economic Growth

Suppose the current level of output is 5000 and the elasticity of output with respect to capital is 0.4.A 10% increase in capital would increase the current level of output to

Correct Answer
verified

A new pollution law requires businesses to pay for inspections of their plants by independent pollution-monitoring firms.What effect is this likely to have?

Correct Answer
verified

The Solow model demonstrates that

Correct Answer
verified

Briefly explain the shape of the per-worker production curve in the Solow model.If investment per worker initially exceeds saving per worker,how is the steady state capital-labor ratio achieved?

Correct Answer
verified
The per-worker production curve is posit...
View Answer

The growth accounting equation is

Correct Answer
verified

Correct Answer
verified
(a)Growth rate = sA - d = (0.1 × 2)- 0.1...
View Answer

Government policies to raise the rate of productivity growth include all of the following EXCEPT

Correct Answer
verified

Correct Answer
verified
(a)sf(k)= (n + d)k,so 0.1 × 6k...
View Answer

In the Solow model,if f(k) = 2k0.5,s = 0.3,n = 0.05,and d = 0.15,what is the value of k at equilibrium?

Correct Answer
verified

Labor productivity increased so much in the second half of the 1990s because of

Correct Answer
verified

The idea that measurement problems could explain the productivity slowdown since 1973 is based on the fact that

Correct Answer
verified

In the absence of productivity growth,in a steady-state economy

Correct Answer
verified

A government policy that would reduce the saving rate is

Correct Answer
verified

If capital and labor each grow 5% in a year,the elasticities of output with respect to capital and labor sum to one,and productivity grows 2% in the year,by how much does output grow during the year?

Correct Answer
verified

All else being equal,a permanent decrease in the saving rate in a steady-state economy would cause

Correct Answer
verified

An increase in the saving rate in a steady-state economy would cause

Correct Answer
verified

The idea that saving equals investment in the Solow model means that a steady state can be reached only when

Correct Answer
verified

A government policy that would raise the rate of productivity growth is

Correct Answer
verified

Correct Answer
verified
(a)aK ?K/K = 0.3(2000 / 10,000...
View Answer

In the Solow model,if f(k) = 6k0.5,s = 0.1,n = 0.1,and d = 0.2,what is the value of c at equilibrium?

Correct Answer
verified

Exam 6: Long-Run Economic Growth

Suppose the current level of output is 5000 and the elasticity of output with respect to capital is 0.4.A 10% increase in capital would increase the current level of output to

Correct AnswerverifiedShow Answer

A new pollution law requires businesses to pay for inspections of their plants by independent pollution-monitoring firms.What effect is this likely to have?

Correct AnswerverifiedShow Answer

The Solow model demonstrates that

Correct AnswerverifiedShow Answer

Briefly explain the shape of the per-worker production curve in the Solow model.If investment per worker initially exceeds saving per worker,how is the steady state capital-labor ratio achieved?

Correct AnswerverifiedThe per-worker production curve is posit...View AnswerShow Answer

The growth accounting equation is

Correct AnswerverifiedShow Answer

Correct Answerverified(a)Growth rate = sA - d = (0.1 × 2)- 0.1...View AnswerShow Answer

Government policies to raise the rate of productivity growth include all of the following EXCEPT

Correct AnswerverifiedShow Answer

Correct Answerverified(a)sf(k)= (n + d)k,so 0.1 × 6k...View AnswerShow Answer

In the Solow model,if f(k) = 2k0.5,s = 0.3,n = 0.05,and d = 0.15,what is the value of k at equilibrium?

Correct AnswerverifiedShow Answer

Labor productivity increased so much in the second half of the 1990s because of

Correct AnswerverifiedShow Answer

The idea that measurement problems could explain the productivity slowdown since 1973 is based on the fact that

Correct AnswerverifiedShow Answer

In the absence of productivity growth,in a steady-state economy

Correct AnswerverifiedShow Answer

A government policy that would reduce the saving rate is

Correct AnswerverifiedShow Answer

If capital and labor each grow 5% in a year,the elasticities of output with respect to capital and labor sum to one,and productivity grows 2% in the year,by how much does output grow during the year?

Correct AnswerverifiedShow Answer

All else being equal,a permanent decrease in the saving rate in a steady-state economy would cause

Correct AnswerverifiedShow Answer

An increase in the saving rate in a steady-state economy would cause

Correct AnswerverifiedShow Answer

The idea that saving equals investment in the Solow model means that a steady state can be reached only when

Correct AnswerverifiedShow Answer

A government policy that would raise the rate of productivity growth is

Correct AnswerverifiedShow Answer

Correct Answerverified(a)aK ?K/K = 0.3(2000 / 10,000...View AnswerShow Answer

In the Solow model,if f(k) = 6k0.5,s = 0.1,n = 0.1,and d = 0.2,what is the value of c at equilibrium?

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The per-worker production curve is posit...
View Answer

Correct Answer
verified

Correct Answer
verified
(a)Growth rate = sA - d = (0.1 × 2)- 0.1...
View Answer

Correct Answer
verified

Correct Answer
verified
(a)sf(k)= (n + d)k,so 0.1 × 6k...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
verified

Correct Answer
verified
(a)aK ?K/K = 0.3(2000 / 10,000...
View Answer

Correct Answer
verified