Question 1

The relationship between the output produced in an economy, the input of factors of production, and the state of technological knowledge is called the

Accepted Answer

A) the aggregate supply function 
B) aggregate production function 
C) aggregate investment function 
D) marginal product of labor 
E) marginal product of capital 
A) the aggregate supply function 
B) aggregate production function 
C) aggregate investment function 
D) marginal product of labor 
E) marginal product of capital

Question 2

Assume a production function with constant returns to scale.Labor's share of income is 4/5 and capital's share is 1/5.If labor grows at 3%, capital at 2%, and the rate of technological advance is 1.2%, roughly how many years would it take to double the current level of output?

Accepted Answer

A) 12 
B) 18 
C) 23 
D) 35 
E) 48 
A) 12 
B) 18 
C) 23 
D) 35 
E) 48

Question 3

In the neoclassical growth model, if a nation's savings rate decreases, we should expect that

Accepted Answer

A) the long-run income per capita will increase 
B) the long-run capital-labor ratio will increase 
C) the growth rate of output will temporarily decrease but eventually return to its long-run trend 
D) all of the above 
E) none of the above 
A) the long-run income per capita will increase 
B) the long-run capital-labor ratio will increase 
C) the growth rate of output will temporarily decrease but eventually return to its long-run trend 
D) all of the above 
E) none of the above

Question 4

The idea of a steady state is that

Accepted Answer

A) the capital-labor ratio grows at a constant rate 
B) output per capita grows at a constant rate 
C) output, capital, and labor all grow at the same rate 
D) an increase in the savings rate will not affect the capital-labor ratio 
E) real output cannot grow 
A) the capital-labor ratio grows at a constant rate 
B) output per capita grows at a constant rate 
C) output, capital, and labor all grow at the same rate 
D) an increase in the savings rate will not affect the capital-labor ratio 
E) real output cannot grow

Question 5

The convergence to a steady-state capital-labor ratio k* is ensured by the fact that if k is at a level

Accepted Answer

A) lower than k*, saving will exceed the investment required to maintain a constant k, causing k to rise 
B) lower than k*, investment will exceed saving, leading to an increase in the capital stock 
C) lower than k*, saving will exceed the investment required to maintain a constant k, causing output per capita to decline 
D) higher than k*, the rate of depreciation will be higher than the savings rate, causing k to decrease 
E) higher than k*, output per capita will continue to increase until a new steady-state equilibrium is reached 
A) lower than k*, saving will exceed the investment required to maintain a constant k, causing k to rise 
B) lower than k*, investment will exceed saving, leading to an increase in the capital stock 
C) lower than k*, saving will exceed the investment required to maintain a constant k, causing output per capita to decline 
D) higher than k*, the rate of depreciation will be higher than the savings rate, causing k to decrease 
E) higher than k*, output per capita will continue to increase until a new steady-state equilibrium is reached

Question 6

If two countries have the same aggregate production function, rate of technological growth, and savings rate, then

Accepted Answer

A) they will always have the same per-capita income 
B) the country with the higher rate of population growth will have a higher per-capita income 
C) the country with the lower rate of population growth will have a higher per-capita income 
D) the country with the highest depreciation rate will have the highest per-capita income 
E) both C and D 
A) they will always have the same per-capita income 
B) the country with the higher rate of population growth will have a higher per-capita income 
C) the country with the lower rate of population growth will have a higher per-capita income 
D) the country with the highest depreciation rate will have the highest per-capita income 
E) both C and D

Question 7

Assume a production function with constant returns to scale.The share of capital in production is 1/4 and the share of labor is 3/4.If both labor and capital grow at 1.6% and the rate of technological progress is 1.2%, what is the rate of growth of real output?

Accepted Answer

A) 1)2% 
B) 1)6% 
C) 2)8% 
D) 3)2% 
E) 4)8% 
A) 1)2% 
B) 1)6% 
C) 2)8% 
D) 3)2% 
E) 4)8%

Question 8

According to neoclassical growth theory which of the following does NOT affect a nation's long-term growth rate?

Accepted Answer

A) the savings rate 
B) technological progress 
C) the rate of depreciation 
D) population growth 
E) both A and C 
A) the savings rate 
B) technological progress 
C) the rate of depreciation 
D) population growth 
E) both A and C

Question 9

In a neoclassical growth model, if the capital-labor ratio is lower than the (optimal) steady-state level, we should expect that

Accepted Answer

A) saving is smaller than the investment requirement 
B) output per capita will temporarily grow at a rate lower than population growth 
C) income per capita will decrease 
D) there will be a temporary increase in the capital stock that is greater than the increase in population 
E) all of the above 
A) saving is smaller than the investment requirement 
B) output per capita will temporarily grow at a rate lower than population growth 
C) income per capita will decrease 
D) there will be a temporary increase in the capital stock that is greater than the increase in population 
E) all of the above

Question 10

Assume a Cobb-Douglas production function where the share of capital is 0.3 and the share of labor is 0.7.If capital grows by 1.5%, labor grows by 2%, and growth of total factor productivity is 1.2%, by how much does total output grow?

Accepted Answer

A) 4)70% 
B) 3)50% 
C) 3)05% 
D) 2)85% 
E) 1)20% 
A) 4)70% 
B) 3)50% 
C) 3)05% 
D) 2)85% 
E) 1)20%

Question 11

In a neoclassical growth model, steady-state consumption is maximized when the marginal increase in the capital-labor ratio (k) produces just enough extra output per capita (y) that the marginal product of k is equal to

Accepted Answer

A) n + d 
B) sy/(n - d) 
C) sy/(n + d) 
D) sa - (n + d) 
E) s - (n + d) 
A) n + d 
B) sy/(n - d) 
C) sy/(n + d) 
D) sa - (n + d) 
E) s - (n + d)

Question 12

An economy with a capital-labor ratio that is lower than the steady-state level can achieve a steady-state equilibrium at this lower capital-labor ratio only if

Accepted Answer

A) the savings rate decreases 
B) the rate of depreciation decreases 
C) the rate of population growth decreases 
D) technological advances are made 
E) all of the above 
A) the savings rate decreases 
B) the rate of depreciation decreases 
C) the rate of population growth decreases 
D) technological advances are made 
E) all of the above

Question 13

In a neoclassical growth model, a decline in population growth will

Accepted Answer

A) shift the production function down 
B) shift the savings function down 
C) decrease the slope of the investment requirement line 
D) all of the above 
E) only A and C 
A) shift the production function down 
B) shift the savings function down 
C) decrease the slope of the investment requirement line 
D) all of the above 
E) only A and C

Question 14

Assume a Cobb-Douglas production function where the share of labor is 0.7 and the share of capital is 0.3.If there is no technological progress, capital grows at 1.5%, and labor doesn't grow at all, what is the growth rate of output?

Accepted Answer

A) 0)45% 
B) 0)60% 
C) 1)05% 
D) 1)50% 
E) 2)00% 
A) 0)45% 
B) 0)60% 
C) 1)05% 
D) 1)50% 
E) 2)00%

Question 15

If we compare the annual growth rates in the U.S.and Japan, we see that from 1950 to 1992, the difference in average annual growth in GDP per capita between Japan and the U.S.was about

Accepted Answer

A) 1)2% 
B) 2)2% 
C) 2)8% 
D) 3)8% 
E) 5)2% 
A) 1)2% 
B) 2)2% 
C) 2)8% 
D) 3)8% 
E) 5)2%

Question 16

Growth accounting explains

Accepted Answer

A) how economic decisions control the accumulation of capital 
B) how the current savings rate affects the stock of capital in the future 
C) what part of growth in total output is due to growth in different factors of production 
D) all of the above 
E) only A and B 
A) how economic decisions control the accumulation of capital 
B) how the current savings rate affects the stock of capital in the future 
C) what part of growth in total output is due to growth in different factors of production 
D) all of the above 
E) only A and B

Question 17

In a neoclassical growth model in which a one-time advance in technology occurs we could expect

Accepted Answer

A) the level of saving and investment to increase until a new and higher steady-state capital-labor ratio is reached 
B) the level of income per capita to increase but the steady-state growth rate of output to remain unaffected 
C) the level of output for any given capital-labor ratio to increase 
D) all of the above 
E) none of the above 
A) the level of saving and investment to increase until a new and higher steady-state capital-labor ratio is reached 
B) the level of income per capita to increase but the steady-state growth rate of output to remain unaffected 
C) the level of output for any given capital-labor ratio to increase 
D) all of the above 
E) none of the above

Question 18

The golden-rule capital stock (k**) ensuring that steady-state consumption is maximized is at the point on the production function f(k) where the marginal product of capital (k) is equal to

Accepted Answer

A) n + d 
B) n - d 
C) s(n + d) 
D) sa/(n + d) 
E) sa/(n - d) 
A) n + d 
B) n - d 
C) s(n + d) 
D) sa/(n + d) 
E) sa/(n - d)

Question 19

Which of the following is NOT a source of increased factor productivity?

Accepted Answer

A) an increase in average years of schooling 
B) an increase in on-the-job training 
C) increased investment in health 
D) an increase in the size of the capital stock 
E) an increase in the rate of innovation 
A) an increase in average years of schooling 
B) an increase in on-the-job training 
C) increased investment in health 
D) an increase in the size of the capital stock 
E) an increase in the rate of innovation

Question 20

Given the production function Y = AF(K,N) and assuming constant returns to scale, the contribution of capital to output growth can be estimated by

Accepted Answer

A) adding the growth rate of capital to the term A 
B) multiplying the growth rate of capital by capital's share in production 
C) subtracting the growth rate of labor from the rate of technological advancement 
D) multiplying the capital-labor ratio by the level of output 
E) multiplying total factor productivity with capital's share in production 
A) adding the growth rate of capital to the term A 
B) multiplying the growth rate of capital by capital's share in production 
C) subtracting the growth rate of labor from the rate of technological advancement 
D) multiplying the capital-labor ratio by the level of output 
E) multiplying total factor productivity with capital's share in production

Exam 3: Growth and accumulation

The relationship between the output produced in an economy, the input of factors of production, and the state of technological knowledge is called the

Assume a production function with constant returns to scale.Labor's share of income is 4/5 and capital's share is 1/5.If labor grows at 3%, capital at 2%, and the rate of technological advance is 1.2%, roughly how many years would it take to double the current level of output?

In the neoclassical growth model, if a nation's savings rate decreases, we should expect that

The idea of a steady state is that

The convergence to a steady-state capital-labor ratio k* is ensured by the fact that if k is at a level

If two countries have the same aggregate production function, rate of technological growth, and savings rate, then

Assume a production function with constant returns to scale.The share of capital in production is 1/4 and the share of labor is 3/4.If both labor and capital grow at 1.6% and the rate of technological progress is 1.2%, what is the rate of growth of real output?

According to neoclassical growth theory which of the following does NOT affect a nation's long-term growth rate?

In a neoclassical growth model, if the capital-labor ratio is lower than the (optimal) steady-state level, we should expect that

Assume a Cobb-Douglas production function where the share of capital is 0.3 and the share of labor is 0.7.If capital grows by 1.5%, labor grows by 2%, and growth of total factor productivity is 1.2%, by how much does total output grow?

In a neoclassical growth model, steady-state consumption is maximized when the marginal increase in the capital-labor ratio (k) produces just enough extra output per capita (y) that the marginal product of k is equal to

An economy with a capital-labor ratio that is lower than the steady-state level can achieve a steady-state equilibrium at this lower capital-labor ratio only if

In a neoclassical growth model, a decline in population growth will

Assume a Cobb-Douglas production function where the share of labor is 0.7 and the share of capital is 0.3.If there is no technological progress, capital grows at 1.5%, and labor doesn't grow at all, what is the growth rate of output?

If we compare the annual growth rates in the U.S.and Japan, we see that from 1950 to 1992, the difference in average annual growth in GDP per capita between Japan and the U.S.was about

Growth accounting explains

In a neoclassical growth model in which a one-time advance in technology occurs we could expect

The golden-rule capital stock (k**) ensuring that steady-state consumption is maximized is at the point on the production function f(k) where the marginal product of capital (k) is equal to

Which of the following is NOT a source of increased factor productivity?

Given the production function Y = AF(K,N) and assuming constant returns to scale, the contribution of capital to output growth can be estimated by

Introduction

National income accounting

Growth and policy

Aggregate supply and demand

Aggregate supply and the phillips curve

Unemployment

Inflation

Policy preview

Income and spending

Money, interest, and income

Monetary and fiscal policy

International linkages

Consumption and saving

Investment spending

The demand for money

The fed, money, and credit

Policy

Financial markets and asset prices

The national debt

Recession and depression

Inflation and hyperinflation

International adjustment and interdependence

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