Question 1

A primary deficiency of the Solow growth model is that

Accepted Answer

A)  it does not explain the savings and investment relationship. 
B)  it does not explain per capita output itself. 
C)  it does not explain changes in total factor productivity. 
D)  it does not explain economic development. 
E)  it does not explain how to control population. 
A)  it does not explain the savings and investment relationship. 
B)  it does not explain per capita output itself. 
C)  it does not explain changes in total factor productivity. 
D)  it does not explain economic development. 
E)  it does not explain how to control population.

Question 2

The idea that contact with others with high levels of human capital increases ones' own human capital is called human capital

Accepted Answer

A)  contagion. 
B)  externality. 
C)  transference. 
D)  convergence. 
E)  equilibrium. 
A)  contagion. 
B)  externality. 
C)  transference. 
D)  convergence. 
E)  equilibrium.

Question 3

In the endogenous growth model presented in the text, suppose that u represents the fraction of time spent working (as opposed to accumulating human capital)and b represents the efficiency of human capital accumulation. The growth rate of consumption equals

Accepted Answer

A)  u(1 - b) - 1. 
B)  1 + b(1 - u). 
C)  (1 - b)(1 - u). 
D)  b(1 - u) - 1. 
E)  b(1 - u)². 
A)  u(1 - b) - 1. 
B)  1 + b(1 - u). 
C)  (1 - b)(1 - u). 
D)  b(1 - u) - 1. 
E)  b(1 - u)².

Question 4

Human capital is

Accepted Answer

A)  the accumulated stock of skills and education a worker has. 
B)  the accumulated stock of skills and capital a worker has. 
C)  a measure of aggregate economic welfare. 
D)  a measure of physical capital per worker used in endogenous growth models. 
E)  the accumulated stock of physical capital per worker. 
A)  the accumulated stock of skills and education a worker has. 
B)  the accumulated stock of skills and capital a worker has. 
C)  a measure of aggregate economic welfare. 
D)  a measure of physical capital per worker used in endogenous growth models. 
E)  the accumulated stock of physical capital per worker.

Question 5

In the equation describing the accumulation of human capital, H' = b(1 - u)H, the parameter b determines

Accepted Answer

A)  the efficiency of the educational sector. 
B)  the efficiency of human capital. 
C)  physical capital accumulation. 
D)  the level of human capital in equilibrium. 
E)  the growth rate of the labour force in equilibrium. 
A)  the efficiency of the educational sector. 
B)  the efficiency of human capital. 
C)  physical capital accumulation. 
D)  the level of human capital in equilibrium. 
E)  the growth rate of the labour force in equilibrium.

Question 6

Paul Romer argues that a key feature of knowledge is

Accepted Answer

A)  divisibility. 
B)  private ownership. 
C)  nonrivalry. 
D)  durability. 
E)  physical capital. 
A)  divisibility. 
B)  private ownership. 
C)  nonrivalry. 
D)  durability. 
E)  physical capital.

Question 7

The endogenous growth model appears consistent with the fact that there are

Accepted Answer

A)  persistent differences in income per worker between the poorer countries and the richer countries. 
B)  persistent differences in consumption per worker between the poorer countries and the richer countries. 
C)  persistent differences in government spending between the poorer countries and the richer countries. 
D)  persistent differences in infrastructure between the poorer countries and the richer countries. 
E)  persistent differences in education per worker between the poorer countries and the richer countries. 
A)  persistent differences in income per worker between the poorer countries and the richer countries. 
B)  persistent differences in consumption per worker between the poorer countries and the richer countries. 
C)  persistent differences in government spending between the poorer countries and the richer countries. 
D)  persistent differences in infrastructure between the poorer countries and the richer countries. 
E)  persistent differences in education per worker between the poorer countries and the richer countries.

Question 8

Which of the following is a way to obtain endogenous growth?

Accepted Answer

A)  inflation 
B)  physical capital accumulation 
C)  population growth 
D)  human capital accumulation 
E)  reduce barriers to technology adoption 
A)  inflation 
B)  physical capital accumulation 
C)  population growth 
D)  human capital accumulation 
E)  reduce barriers to technology adoption

Question 9

If the time allocated to human capital accumulation increases

Accepted Answer

A)  output is higher forever. 
B)  output is lower forever. 
C)  output grows at a higher rate, but is lower initially. 
D)  the government sector grows. 
E)  international trade declines. 
A)  output is higher forever. 
B)  output is lower forever. 
C)  output grows at a higher rate, but is lower initially. 
D)  the government sector grows. 
E)  international trade declines.

Question 10

Barriers to the adoption of new technology causes

Accepted Answer

A)  total factor productivity to differ. 
B)  the size of government to diminish. 
C)  new government policies to be implemented. 
D)  trade restrictions to be imposed. 
E)  output per worker to rise. 
A)  total factor productivity to differ. 
B)  the size of government to diminish. 
C)  new government policies to be implemented. 
D)  trade restrictions to be imposed. 
E)  output per worker to rise.

Question 11

In the endogenous growth model,

Accepted Answer

A)  the growth rate of human capital is greater than the growth rate of output. 
B)  the growth rate of human capital is equal to the growth rate of output. 
C)  the growth rate of capital is less than the growth rate of output. 
D)  the growth rate of output is greater than to the growth rate of human capital. 
E)  the growth rate of output is equal to the growth rate of human capital. 
A)  the growth rate of human capital is greater than the growth rate of output. 
B)  the growth rate of human capital is equal to the growth rate of output. 
C)  the growth rate of capital is less than the growth rate of output. 
D)  the growth rate of output is greater than to the growth rate of human capital. 
E)  the growth rate of output is equal to the growth rate of human capital.

Question 12

Decreasing the fraction of time devoted to working leads to

Accepted Answer

A)  higher incomes per worker. 
B)  higher consumption per worker. 
C)  increases in the fraction of time spent accumulating human capital. 
D)  lower labour supply. 
E)  a cleaner environment. 
A)  higher incomes per worker. 
B)  higher consumption per worker. 
C)  increases in the fraction of time spent accumulating human capital. 
D)  lower labour supply. 
E)  a cleaner environment.

Question 13

Total factor productivity growth involves

Accepted Answer

A)  spending on national defence and the environment. 
B)  research and development by firms, education, and training on the job. 
C)  increasing the size of government. 
D)  increasing consumption per worker and income per worker. 
E)  favourable government policies. 
A)  spending on national defence and the environment. 
B)  research and development by firms, education, and training on the job. 
C)  increasing the size of government. 
D)  increasing consumption per worker and income per worker. 
E)  favourable government policies.

Question 14

In the endogenous growth model presented in the text, an increase in the efficiency of human capital accumulation

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 15

If monopoly power is not protected by government,

Accepted Answer

A)  firms must develop and implement new technologies to increase productivity. 
B)  firms must lobby for protection. 
C)  other barriers to technology adoption will emerge. 
D)  a country's standard of living will decline. 
E)  firms have no incentive to innovate and increase productivity. 
A)  firms must develop and implement new technologies to increase productivity. 
B)  firms must lobby for protection. 
C)  other barriers to technology adoption will emerge. 
D)  a country's standard of living will decline. 
E)  firms have no incentive to innovate and increase productivity.

Question 16

Income per worker has been

Accepted Answer

A)  converging in both the rich countries and the poor countries. 
B)  converging in the rich countries, but not converging in the poor countries. 
C)  converging in the poor countries but not converging in the rich countries. 
D)  converging in neither the poor nor the rich countries. 
E)  fluctuating significantly for both the rich and poor countries. 
A)  converging in both the rich countries and the poor countries. 
B)  converging in the rich countries, but not converging in the poor countries. 
C)  converging in the poor countries but not converging in the rich countries. 
D)  converging in neither the poor nor the rich countries. 
E)  fluctuating significantly for both the rich and poor countries.

Question 17

In the endogenous growth model

Accepted Answer

A)  growth ceases in the steady state. 
B)  growth depends on the efficiency of human capital accumulation and the time devoted to it. 
C)  countries with different initial human capital will converge in the steady state. 
D)  growth depends on the government sector. 
E)  growth depends on international trade. 
A)  growth ceases in the steady state. 
B)  growth depends on the efficiency of human capital accumulation and the time devoted to it. 
C)  countries with different initial human capital will converge in the steady state. 
D)  growth depends on the government sector. 
E)  growth depends on international trade.

Question 18

In the endogenous growth model, government policy can affect

Accepted Answer

A)  the budgetary deficit. 
B)  the growth rate of aggregate output and consumption. 
C)  exports. 
D)  interest rates. 
E)  leisure. 
A)  the budgetary deficit. 
B)  the growth rate of aggregate output and consumption. 
C)  exports. 
D)  interest rates. 
E)  leisure.

Question 19

Suppose that two countries share identical levels of total factor productivity, identical labour force growth rates and identical savings rates. According to the Solow model,

Accepted Answer

A)  the country with the greater initial level of output per worker will grow more rapidly than the country with the smaller initial level of output per worker. 
B)  the country with the smaller initial level of output per worker will grow more rapidly than the country with the greater initial level of output per worker. 
C)  both countries will have the same growth rates of output per worker, even if they start out with different levels of output per worker. 
D)  if both countries start out with different levels of income per worker, both countries may have different growth rates of output per worker, but we cannot be certain which country will have the higher growth rate of output per worker. 
E)  the country with the smaller initial income per worker will grow more rapidly than the country with the greater initial level of income per worker. 
A)  the country with the greater initial level of output per worker will grow more rapidly than the country with the smaller initial level of output per worker. 
B)  the country with the smaller initial level of output per worker will grow more rapidly than the country with the greater initial level of output per worker. 
C)  both countries will have the same growth rates of output per worker, even if they start out with different levels of output per worker. 
D)  if both countries start out with different levels of income per worker, both countries may have different growth rates of output per worker, but we cannot be certain which country will have the higher growth rate of output per worker. 
E)  the country with the smaller initial income per worker will grow more rapidly than the country with the greater initial level of income per worker.

Question 20

In the endogenous growth model presented in the text, suppose that u represents the fraction of time spent working (as opposed to accumulating human capital), b represents the efficiency of human capital accumulation, H represents the amount of human capital, and z represents the marginal product of efficiency units of labour. Consumption equals

Accepted Answer

A)  buH. 
B)  zuH. 
C)  buz. 
D)  buzH. 
E)  ebuH². 
A)  buH. 
B)  zuH. 
C)  buz. 
D)  buzH. 
E)  ebuH².

A primary deficiency of the Solow growth model is that

The idea that contact with others with high levels of human capital increases ones' own human capital is called human capital

In the endogenous growth model presented in the text, suppose that u represents the fraction of time spent working (as opposed to accumulating human capital)and b represents the efficiency of human capital accumulation. The growth rate of consumption equals

Human capital is

In the equation describing the accumulation of human capital, H' = b(1 - u)H, the parameter b determines

Paul Romer argues that a key feature of knowledge is

The endogenous growth model appears consistent with the fact that there are

Which of the following is a way to obtain endogenous growth?

If the time allocated to human capital accumulation increases

Barriers to the adoption of new technology causes

In the endogenous growth model,

Decreasing the fraction of time devoted to working leads to

Total factor productivity growth involves

In the endogenous growth model presented in the text, an increase in the efficiency of human capital accumulation

If monopoly power is not protected by government,

Income per worker has been

In the endogenous growth model

In the endogenous growth model, government policy can affect

Suppose that two countries share identical levels of total factor productivity, identical labour force growth rates and identical savings rates. According to the Solow model,

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

A primary deficiency of the Solow growth model is that

The idea that contact with others with high levels of human capital increases ones' own human capital is called human capital

In the endogenous growth model presented in the text, suppose that u represents the fraction of time spent working (as opposed to accumulating human capital)and b represents the efficiency of human capital accumulation. The growth rate of consumption equals

Human capital is

In the equation describing the accumulation of human capital, H' = b(1 - u)H, the parameter b determines

Paul Romer argues that a key feature of knowledge is

The endogenous growth model appears consistent with the fact that there are

Which of the following is a way to obtain endogenous growth?

If the time allocated to human capital accumulation increases

Barriers to the adoption of new technology causes

In the endogenous growth model,

Decreasing the fraction of time devoted to working leads to

Total factor productivity growth involves

In the endogenous growth model presented in the text, an increase in the efficiency of human capital accumulation

If monopoly power is not protected by government,

Income per worker has been

In the endogenous growth model

In the endogenous growth model, government policy can affect

Suppose that two countries share identical levels of total factor productivity, identical labour force growth rates and identical savings rates. According to the Solow model,

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