Question 1

Government policies that increase the efficiency of the education sector

Accepted Answer

A)  increase the growth rate of output and consumption, unambiguously increasing welfare. 
B)  increase the growth rate of output but have an ambiguous impact on consumption growth and welfare. 
C)  increase the growth rate of consumption, has no effect on output. 
D)  increase welfare but have ambiguous effects on growth rates of consumption and output. 
E)  imply a trade-off between accumulating human capital and physical capital. 
A)  increase the growth rate of output and consumption, unambiguously increasing welfare. 
B)  increase the growth rate of output but have an ambiguous impact on consumption growth and welfare. 
C)  increase the growth rate of consumption, has no effect on output. 
D)  increase welfare but have ambiguous effects on growth rates of consumption and output. 
E)  imply a trade-off between accumulating human capital and physical capital.

Question 2

In contrast to the Solow growth model, the endogenous growth model

Accepted Answer

A)  does not take standards of living into account. 
B)  does not take savings into account. 
C)  predicts persistent differences in per capita income. 
D)  predicts convergence in per capita incomes over time. 
E)  does not explain reality. 
A)  does not take standards of living into account. 
B)  does not take savings into account. 
C)  predicts persistent differences in per capita income. 
D)  predicts convergence in per capita incomes over time. 
E)  does not explain reality.

Question 3

Government ownership of production

Accepted Answer

A)  encourages competition. 
B)  should never happen. 
C)  increases total factor productivity. 
D)  leads to protection of employment at the expense of efficiency. 
E)  is negatively correlated with economic growth. 
A)  encourages competition. 
B)  should never happen. 
C)  increases total factor productivity. 
D)  leads to protection of employment at the expense of efficiency. 
E)  is negatively correlated with economic growth.

Question 4

Suppose a country is significantly richer than the others. According to the Solow growth model, what happens in the long run?

Accepted Answer

A)  The other countries catch up to the rich one. 
B)  Nothing. 
C)  The rich country becomes poorer than the other ones. 
D)  The rich country grows the fastest. 
E)  Both grow at the same rate and the income differences persist. 
A)  The other countries catch up to the rich one. 
B)  Nothing. 
C)  The rich country becomes poorer than the other ones. 
D)  The rich country grows the fastest. 
E)  Both grow at the same rate and the income differences persist.

Question 5

The Solow growth model predicts that aggregate output

Accepted Answer

A)  will grow at the rate of the labour force growth in the long run. 
B)  will grow at the rate of the population growth in the long run. 
C)  will grow at the rate of the growth in capital per worker in the long run. 
D)  will grow at the rate of the growth in income per worker in the long run. 
E)  will be maximized in the long run. 
A)  will grow at the rate of the labour force growth in the long run. 
B)  will grow at the rate of the population growth in the long run. 
C)  will grow at the rate of the growth in capital per worker in the long run. 
D)  will grow at the rate of the growth in income per worker in the long run. 
E)  will be maximized in the long run.

Question 6

In the endogenous growth model presented in the text, an increase in the fraction of time accumulating human capital

Accepted Answer

A)  increases the growth rate of human capital and increases the growth rate of output. 
B)  increases the growth rate of human capital and decreases the growth rate of output. 
C)  decreases the growth rate of human capital and increases the growth rate of output. 
D)  decreases the growth rate of human capital and decreases the growth rate of output. 
E)  decreases the growth rate of human capital and reduces total factor productivity. 
A)  increases the growth rate of human capital and increases the growth rate of output. 
B)  increases the growth rate of human capital and decreases the growth rate of output. 
C)  decreases the growth rate of human capital and increases the growth rate of output. 
D)  decreases the growth rate of human capital and decreases the growth rate of output. 
E)  decreases the growth rate of human capital and reduces total factor productivity.

Question 7

What causes barriers to technology adoption?

Accepted Answer

A)  weather 
B)  population 
C)  political barriers to international trade 
D)  tax policies 
E)  the size of government 
A)  weather 
B)  population 
C)  political barriers to international trade 
D)  tax policies 
E)  the size of government

Question 8

In the endogenous growth models of Lucas and Romer, human capital accumulation is best described as a form of

Accepted Answer

A)  consumption. 
B)  investment. 
C)  government spending. 
D)  natural resource. 
E)  total factor productivity. 
A)  consumption. 
B)  investment. 
C)  government spending. 
D)  natural resource. 
E)  total factor productivity.

Question 9

A major differences between the Solow growth model and the endogenous growth model is

Accepted Answer

A)  the level of consumption in the long run. 
B)  the different levels of steady states. 
C)  the Solow growth model assumes favourable changes in government regulations. 
D)  the endogenous growth model assumes continuous declines in the prices of inputs. 
E)  the endogenous growth model does not predict convergence in levels of per capita incomes across countries. 
A)  the level of consumption in the long run. 
B)  the different levels of steady states. 
C)  the Solow growth model assumes favourable changes in government regulations. 
D)  the endogenous growth model assumes continuous declines in the prices of inputs. 
E)  the endogenous growth model does not predict convergence in levels of per capita incomes across countries.

Question 10

According to the Solow model, differences in standards of living across countries is explained by

Accepted Answer

A)  differences in labour supply. 
B)  differences in population growth. 
C)  differences in total factor productivity. 
D)  different barriers to technology adoption. 
E)  different steady states. 
A)  differences in labour supply. 
B)  differences in population growth. 
C)  differences in total factor productivity. 
D)  different barriers to technology adoption. 
E)  different steady states.

Question 11

Countries do not have access to the same technology when

Accepted Answer

A)  government introduces laws to make it easy for labour unions to organize. 
B)  population growth rates increase. 
C)  governments enter into free trade agreements. 
D)  total factor productivity does not converge. 
E)  labour supply declines. 
A)  government introduces laws to make it easy for labour unions to organize. 
B)  population growth rates increase. 
C)  governments enter into free trade agreements. 
D)  total factor productivity does not converge. 
E)  labour supply declines.

Question 12

Government policy can change the rate of economic growth by changing

Accepted Answer

A)  the legal system. 
B)  the size of government. 
C)  free trade arrangements. 
D)  the fraction of time devoted to working. 
E)  labour supply. 
A)  the legal system. 
B)  the size of government. 
C)  free trade arrangements. 
D)  the fraction of time devoted to working. 
E)  labour supply.

Question 13

What explains the differences in standards of living across countries?

Accepted Answer

A)  different employment levels 
B)  different climates 
C)  free trade agreements 
D)  different barriers to technology adoption 
E)  barriers to foreign capital flows 
A)  different employment levels 
B)  different climates 
C)  free trade agreements 
D)  different barriers to technology adoption 
E)  barriers to foreign capital flows

Question 14

In the endogenous growth models of Lucas and Romer, workers divide their time between market work and

Accepted Answer

A)  accumulating physical capital. 
B)  accumulating human capital. 
C)  trying to invent new production processes. 
D)  work at home. 
E)  leisure. 
A)  accumulating physical capital. 
B)  accumulating human capital. 
C)  trying to invent new production processes. 
D)  work at home. 
E)  leisure.

Question 15

Romer's model of endogenous growth is

Accepted Answer

A)  consistent with evidence of convergence in the richer countries and consistent with evidence of convergence in the poorer countries. 
B)  consistent with evidence of convergence in the richer countries and inconsistent with evidence of convergence in the poorer countries. 
C)  inconsistent with evidence of convergence in the richer countries and consistent with evidence of convergence in the poorer countries. 
D)  inconsistent with evidence of convergence in the richer countries and inconsistent with evidence of convergence in the poorer countries. 
E)  only consistent with evidence of convergence in the richer countries. 
A)  consistent with evidence of convergence in the richer countries and consistent with evidence of convergence in the poorer countries. 
B)  consistent with evidence of convergence in the richer countries and inconsistent with evidence of convergence in the poorer countries. 
C)  inconsistent with evidence of convergence in the richer countries and consistent with evidence of convergence in the poorer countries. 
D)  inconsistent with evidence of convergence in the richer countries and inconsistent with evidence of convergence in the poorer countries. 
E)  only consistent with evidence of convergence in the richer countries.

Question 16

Human capital accumulation is different from physical capital accumulation in that

Accepted Answer

A)  human capital costs more to acquire. 
B)  human capital is less productive. 
C)  there is no limit to human knowledge or how productive individuals can become. 
D)  human capital suffers from diminishing marginal returns. 
E)  physical capital has higher returns. 
A)  human capital costs more to acquire. 
B)  human capital is less productive. 
C)  there is no limit to human knowledge or how productive individuals can become. 
D)  human capital suffers from diminishing marginal returns. 
E)  physical capital has higher returns.

Question 17

Barriers to Riches, by S. Parente and E. Prescott, emphasizes the importance of

Accepted Answer

A)  barriers to technological adoption. 
B)  barriers to the development of natural resources. 
C)  public education. 
D)  endogenous growth. 
E)  free trade. 
A)  barriers to technological adoption. 
B)  barriers to the development of natural resources. 
C)  public education. 
D)  endogenous growth. 
E)  free trade.

Question 18

As a measure of aggregate economic welfare, real GDP per capita misses which of the following?

Accepted Answer

A)  how the income is distributed across the population 
B)  market activity 
C)  incomes 
D)  total output 
E)  the distribution of output across sectors of the economy 
A)  how the income is distributed across the population 
B)  market activity 
C)  incomes 
D)  total output 
E)  the distribution of output across sectors of the economy

Question 19

In the Solow growth model, a country can grow at a higher rate than the population growth rate if

Accepted Answer

A)  capital per worker is below its steady state level. 
B)  capital per worker is above its steady state level. 
C)  the economy is in a steady state. 
D)  there is free trade. 
E)  convergence has occurred. 
A)  capital per worker is below its steady state level. 
B)  capital per worker is above its steady state level. 
C)  the economy is in a steady state. 
D)  there is free trade. 
E)  convergence has occurred.

Question 20

The endogenous growth models were characterized by

Accepted Answer

A)  Friedman and Lucas. 
B)  Parente and Prescott. 
C)  Lucas and Romer. 
D)  Solow. 
E)  Malthus. 
A)  Friedman and Lucas. 
B)  Parente and Prescott. 
C)  Lucas and Romer. 
D)  Solow. 
E)  Malthus.

Government policies that increase the efficiency of the education sector

In contrast to the Solow growth model, the endogenous growth model

Government ownership of production

Suppose a country is significantly richer than the others. According to the Solow growth model, what happens in the long run?

The Solow growth model predicts that aggregate output

In the endogenous growth model presented in the text, an increase in the fraction of time accumulating human capital

What causes barriers to technology adoption?

In the endogenous growth models of Lucas and Romer, human capital accumulation is best described as a form of

A major differences between the Solow growth model and the endogenous growth model is

According to the Solow model, differences in standards of living across countries is explained by

Countries do not have access to the same technology when

Government policy can change the rate of economic growth by changing

What explains the differences in standards of living across countries?

In the endogenous growth models of Lucas and Romer, workers divide their time between market work and

Romer's model of endogenous growth is

Human capital accumulation is different from physical capital accumulation in that

Barriers to Riches, by S. Parente and E. Prescott, emphasizes the importance of

As a measure of aggregate economic welfare, real GDP per capita misses which of the following?

In the Solow growth model, a country can grow at a higher rate than the population growth rate if

The endogenous growth models were characterized by

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters

Exam 8: Income Disparity among Countries and Endogenous Growth

Government policies that increase the efficiency of the education sector

In contrast to the Solow growth model, the endogenous growth model

Government ownership of production

Suppose a country is significantly richer than the others. According to the Solow growth model, what happens in the long run?

The Solow growth model predicts that aggregate output

In the endogenous growth model presented in the text, an increase in the fraction of time accumulating human capital

What causes barriers to technology adoption?

In the endogenous growth models of Lucas and Romer, human capital accumulation is best described as a form of

A major differences between the Solow growth model and the endogenous growth model is

According to the Solow model, differences in standards of living across countries is explained by

Countries do not have access to the same technology when

Government policy can change the rate of economic growth by changing

What explains the differences in standards of living across countries?

In the endogenous growth models of Lucas and Romer, workers divide their time between market work and

Romer's model of endogenous growth is

Human capital accumulation is different from physical capital accumulation in that

Barriers to Riches, by S. Parente and E. Prescott, emphasizes the importance of

As a measure of aggregate economic welfare, real GDP per capita misses which of the following?

In the Solow growth model, a country can grow at a higher rate than the population growth rate if

The endogenous growth models were characterized by

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters