Exam 17: Economic Growth Resources Technology Ideas and Institutions

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Exhibit 17-1 Production Function Real GDP = T (L, K), such that Real GDP = T(L + K) Assume that the technology coefficient is equal to 0.40. -Refer to Exhibit 17-1. If this production function is graphed with Real GDP on the vertical axis and labor on the horizontal axis, and labor rises from 6 units to 7 units it would cause a

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Question 1

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In the production function, the variable H represents hunger.

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Question 2

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Using the production function Real GDP = T (L, K), define the term production function and describe what each of the variables (T, L, and K) represents. When graphed with Real GDP on the vertical axis and labor on the horizontal axis, which variable(s) can shift the production function and which variable(s) can cause a movement along the production function?

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Question 3

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A production function specifies the relation between technology (T) and the quantity of factor inputs to output or Real GDP. In this production function the relevant inputs are labor (L) and capital (K). With labor on the horizontal axis of the production function, a change in labor would cause a movement along the production function. When technology or capital change, it causes the production function to shift.

Suppose that the production function for an economy is graphed with Real GDP on the vertical axis and labor on the horizontal axis. When the level of capital in this economy rises, it causes which shifts the LRAS curve resulting in __.

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Question 4

According to Mancur Olson, transfer-promoting policies are more likely to be lobbied for instead of growth-promoting policies when a country has a relatively large number of special-interest groups.

(True/False)

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Question 5

Suppose the population of country XYZ falls from 10 million to 9 million. If the country's Real GDP falls from $325 billion to $297 billion during this same period, the result is _________________ economic growth.

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Question 6

In the production function Real GDP = T (L, K), the T represents the tax coefficient.

(True/False)

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Question 7

When taxes on the return to capital in a given economy are reduced, it causes firms to employ capital goods. In terms of the production function (graphed with labor on the horizontal axis and Real GDP on the vertical axis), this then causes which makes the LRAS curve shift resulting in ____________.

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Question 8

The economist credited with pioneering the "new growth theory" is

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Question 9

Using the production function Real GDP = T (L, K), and the LRAS curve, describe the process by which a decline in taxes on the returns to capital impacts economic growth.

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Question 10

Describe new growth theory. Explain how it differs from neoclassical growth theory.

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Question 11

According to some economists, economic growth can be promoted by certain institutions which promote the discovery of new ideas.

(True/False)

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Question 12

Using the production function Real GDP = T (L, K), and the LRAS curve, describe the process by which a decline in interest rates impacts the use of capital and economic growth.

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Question 13

Higher interest rates cause a(n) in capital utilization, which shifts the production function and thereby shifts the LRAS curve ____.

(Multiple Choice)

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Question 14

Using the production function Real GDP = T (L, K), define the term production function and describe what each of the variables (T, L, and K) represents. When graphed with Real GDP on the vertical axis and labor on the horizontal axis, which variable(s) can shift the production function and which variable(s) can cause a movement along the production function?

(Essay)

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Question 15

In the production function, the variable K represents human capital.

(True/False)

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Question 16

Using the labor market, the production function Real GDP = T (L, K), and the LRAS curve, describe the process by which a decrease in income taxes impacts economic growth.

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Question 17

The Real GDP of country X doubled in 10 years. It follows that

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Question 18

Country X experiences an increase in Real GDP and an increase in per-capita Real GDP. It follows that

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Question 19

When income taxes fall, the supply of labor curve shifts rightward, ultimately leading to the LRAS curve shifting leftward.

(True/False)

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Question 20

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Exam 17: Economic Growth Resources Technology Ideas and Institutions

In the production function, the variable H represents hunger.

Suppose that the production function for an economy is graphed with Real GDP on the vertical axis and labor on the horizontal axis. When the level of capital in this economy rises, it causes ____________________which shifts the LRAS curve ____________ resulting in ______________________.

According to Mancur Olson, transfer-promoting policies are more likely to be lobbied for instead of growth-promoting policies when a country has a relatively large number of special-interest groups.

Suppose the population of country XYZ falls from 10 million to 9 million. If the country's Real GDP falls from $325 billion to $297 billion during this same period, the result is _________________ economic growth.

In the production function Real GDP = T (L, K), the T represents the tax coefficient.

The economist credited with pioneering the "new growth theory" is

Using the production function Real GDP = T (L, K), and the LRAS curve, describe the process by which a decline in taxes on the returns to capital impacts economic growth.

Describe new growth theory. Explain how it differs from neoclassical growth theory.

According to some economists, economic growth can be promoted by certain institutions which promote the discovery of new ideas.

Using the production function Real GDP = T (L, K), and the LRAS curve, describe the process by which a decline in interest rates impacts the use of capital and economic growth.

Higher interest rates cause a(n) ____________in capital utilization, which shifts the production function __________and thereby shifts the LRAS curve ______________.

In the production function, the variable K represents human capital.

Using the labor market, the production function Real GDP = T (L, K), and the LRAS curve, describe the process by which a decrease in income taxes impacts economic growth.

The Real GDP of country X doubled in 10 years. It follows that

Country X experiences an increase in Real GDP and an increase in per-capita Real GDP. It follows that

When income taxes fall, the supply of labor curve shifts rightward, ultimately leading to the LRAS curve shifting leftward.

What Economics Is About

Production Possibilities Frontier Framework

Supply and Demand Theory

Prices Free Controlled and Relative

Supply Demand and Price Applications

Macroeconomic Measurements Part I Prices and Unemployment

Macroeconomic Measurements Part II Gdp and Real Gdp

Aggregate Demand and Aggregate Supply

Classical Macroeconomics and the Self Regulating Economy

Keynesian Macroeconomics and Economic Instability a Critique of the Self Regulating Economy

Fiscal Policy and the Federal Budget

Money Banking and the Financial System

The Federal Reserve System

Money and the Economy

Monetary Policy

Expectations Theory and the Economy

Debates in Macroeconomics Over the Role and Effects of Government

Elasticity

Consumer Choice and Behavioral Economics

Production and Costs

Perfect Competition

Monopoly

Monopolistic Competition Oligopoly and Game Theory

Government and Product Markets Antitrust and Regulation

Factor Markets With Emphasis on the Labor Market

Wages Unions and Labor

The Distribution of Income and Poverty

Interest Rent and Profit

Market Failure Externalities Public Goods and Asymmetric Information

Public Choice and Special Interest Group Politics

Building Theories to Explain Everyday Life From Observations to Questions to Theories to Predictions

International Trade

International Finance

The Economic Case for and Against Government Five Topics Considered

Stocks Bonds Futures and Options

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Suppose that the production function for an economy is graphed with Real GDP on the vertical axis and labor on the horizontal axis. When the level of capital in this economy rises, it causes which shifts the LRAS curve resulting in __.

Higher interest rates cause a(n) in capital utilization, which shifts the production function and thereby shifts the LRAS curve ____.