Question 1

The Solow growth model

Accepted Answer

A) predicts differences in standards of living if total factor productivity is different in different countries. 
B) predicts that income per capita will diverge across countries. 
C) can explain why output grows at a relatively high rate when capital per worker is high. 
D) can explain why output grows at a low rate when population growth is low. 
E) cannot explain differences in standards of living across countries. 
A) predicts differences in standards of living if total factor productivity is different in different countries. 
B) predicts that income per capita will diverge across countries. 
C) can explain why output grows at a relatively high rate when capital per worker is high. 
D) can explain why output grows at a low rate when population growth is low. 
E) cannot explain differences in standards of living across countries. A

Question 2

Parente and Prescott provide evidence that total factor productivity across countries can be explained by

Accepted Answer

A) differences in savings rates. 
B) differences in economic systems. 
C) barriers to technology adoption. 
D) differences in political ideologies. 
E) differences in levels of human capital. 
A) differences in savings rates. 
B) differences in economic systems. 
C) barriers to technology adoption. 
D) differences in political ideologies. 
E) differences in levels of human capital. C

Question 3

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

Accepted Answer

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

Question 4

A primary deficiency of the Solow growth model is that

Accepted Answer

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

Question 5

In the Solow growth model, countries with identical total factor productivities, identical labour force growth rates, and identical savings rates

Accepted Answer

A) in equilibrium, have identical levels of capital per worker and output per worker. 
B) in equilibrium, have identical levels of capital per worker but not necessarily identical levels of output per worker. 
C) in equilibrium, have identical levels of output per worker but not necessarily identical levels of capital per worker. 
D) always have identical levels of capital per worker and output per worker. 
E) there is no convergence to the same level of capital per worker or output per worker. 
A) in equilibrium, have identical levels of capital per worker and output per worker. 
B) in equilibrium, have identical levels of capital per worker but not necessarily identical levels of output per worker. 
C) in equilibrium, have identical levels of output per worker but not necessarily identical levels of capital per worker. 
D) always have identical levels of capital per worker and output per worker. 
E) there is no convergence to the same level of capital per worker or output per worker.

Question 6

In the endogenous growth model, for the consumer more time spent working implies

Accepted Answer

A) less human capital accumulation. 
B) no effects on human capital accumulation. 
C) more leisure. 
D) more human capital accumulation. 
E) learning by doing human capital accumulation. 
A) less human capital accumulation. 
B) no effects on human capital accumulation. 
C) more leisure. 
D) more human capital accumulation. 
E) learning by doing human capital accumulation.

Question 7

Nonrivalry means

Accepted Answer

A) it is possible to prevent a person from enjoying the benefits of a good. 
B) consumption of a good does not decrease the consumption of the good by another person. 
C) the quantity of a good that a person is able to consume is not influenced by the amount the person pays for the good. 
D) the consumption of a good by one person decreases consumption of the good by another person. 
E) it is impossible or extremely costly to prevent someone from benefitting from a good. 
A) it is possible to prevent a person from enjoying the benefits of a good. 
B) consumption of a good does not decrease the consumption of the good by another person. 
C) the quantity of a good that a person is able to consume is not influenced by the amount the person pays for the good. 
D) the consumption of a good by one person decreases consumption of the good by another person. 
E) it is impossible or extremely costly to prevent someone from benefitting from a good.

Question 8

What causes barriers to technology adoption?

Accepted Answer

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

Question 9

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

Accepted Answer

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

Question 10

Countries do NOT have access to the same technology when

Accepted Answer

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

Question 11

Human capital is

Accepted Answer

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

Question 12

A human capital externality is

Accepted Answer

A) when an individual has an unique skill. 
B) when someone purchases a book, for example. 
C) when there is a human capital congestion effect. 
D) when higher human capital for one person increases the human capital of others, or makes them more productive. 
E) when human capital causes pollution. 
A) when an individual has an unique skill. 
B) when someone purchases a book, for example. 
C) when there is a human capital congestion effect. 
D) when higher human capital for one person increases the human capital of others, or makes them more productive. 
E) when human capital causes pollution.

Question 13

Which of the following is best characterized as being nonrivalrous?

Accepted Answer

A) natural resources 
B) knowledge 
C) physical capital 
D) consumption goods 
E) services 
A) natural resources 
B) knowledge 
C) physical capital 
D) consumption goods 
E) services

Question 14

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

Question 15

In the endogenous growth model, more time spent accumulating human capital implies

Accepted Answer

A) less consumption in the near term, but a higher growth rate of consumption in the future. 
B) more consumption in both the short and long run. 
C) more consumption in the near term and a higher growth rate of consumption. 
D) less consumption in the near term and no change in the growth rate of consumption. 
E) more consumption in the near term, but a lower growth rate of consumption in the future. 
A) less consumption in the near term, but a higher growth rate of consumption in the future. 
B) more consumption in both the short and long run. 
C) more consumption in the near term and a higher growth rate of consumption. 
D) less consumption in the near term and no change in the growth rate of consumption. 
E) more consumption in the near term, but a lower growth rate of consumption in the future.

Question 16

Government ownership of production

Accepted Answer

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

Question 17

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

Accepted Answer

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

Question 18

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

Accepted Answer

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

Question 19

What explains the differences in standards of living across countries?

Accepted Answer

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

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

The Solow growth model

Parente and Prescott provide evidence that total factor productivity across countries can be explained by

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

A primary deficiency of the Solow growth model is that

In the Solow growth model, countries with identical total factor productivities, identical labour force growth rates, and identical savings rates

In the endogenous growth model, for the consumer more time spent working implies

Nonrivalry means

What causes barriers to technology adoption?

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

Countries do NOT have access to the same technology when

Human capital is

A human capital externality is

Which of the following is best characterized as being nonrivalrous?

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

In the endogenous growth model, more time spent accumulating human capital implies

Government ownership of production

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

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

What explains the differences in standards of living across countries?

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: the Workleisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

A Two-Period Model: the Consumptionsavings Decision and Credit Markets

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

A Real Intertemporal Model With Investment

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

The Solow growth model

Parente and Prescott provide evidence that total factor productivity across countries can be explained by

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

A primary deficiency of the Solow growth model is that

In the Solow growth model, countries with identical total factor productivities, identical labour force growth rates, and identical savings rates

In the endogenous growth model, for the consumer more time spent working implies

Nonrivalry means

What causes barriers to technology adoption?

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

Countries do NOT have access to the same technology when

Human capital is

A human capital externality is

Which of the following is best characterized as being nonrivalrous?

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

In the endogenous growth model, more time spent accumulating human capital implies

Government ownership of production

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

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

What explains the differences in standards of living across countries?

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: the Workleisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

A Two-Period Model: the Consumptionsavings Decision and Credit Markets

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

A Real Intertemporal Model With Investment

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