Question 1

The level of the capital-labor ratio that maximizes consumption per worker in the steady state is known as the

Accepted Answer

A) Solow residual capital-labor ratio. 
B) Golden Rule capital-labor ratio. 
C) q theory capital-labor ratio. 
D) dynamically efficient capital-labor ratio. 
A) Solow residual capital-labor ratio. 
B) Golden Rule capital-labor ratio. 
C) q theory capital-labor ratio. 
D) dynamically efficient capital-labor ratio.

Question 2

Over the past year,productivity grew 1%,capital grew 0%,and labor grew 5%.If the elasticities of output with respect to capital and labor are 0.4 and 0.6,respectively,how much did output grow?

Accepted Answer

A) 1% 
B) 2% 
C) 3% 
D) 4% 
A) 1% 
B) 2% 
C) 3% 
D) 4%

Question 3

(a)In the model of endogenous growth,if s = 0.1,A = 2,and d = 0.15,calculate the economy's growth rate.Show your work.
(b)If the depreciation rate declines to d = 0.10,calculate the economy's growth rate.Show your work.
(c)Is the impact on the growth rate arising from a change in the depreciation rate in the endogenous growth model the same as in the Solow model?

Accepted Answer

(a)Growth rate = sA - d = (0.1 × 2)- 0.1

Question 4

Suppose the current level of output is 5000.A 10% increase in productivity would increase the current level of output to

Accepted Answer

A) 5050. 
B) 5100. 
C) 5500. 
D) 6000. 
A) 5050. 
B) 5100. 
C) 5500. 
D) 6000.

Question 5

Which of the following best describes a steady state?

Accepted Answer

A) Political stability is maintained by the state. 
B) The standard of living is increasing at a stable rate. 
C) Each firm in the economy receives a steady stream of income. 
D) Output per worker, consumption per worker, and capital per worker are constant. 
A) Political stability is maintained by the state. 
B) The standard of living is increasing at a stable rate. 
C) Each firm in the economy receives a steady stream of income. 
D) Output per worker, consumption per worker, and capital per worker are constant.

Question 6

In the long run,a reduction in productivity will cause

Accepted Answer

A) an increase in the capital-labor ratio and an increase in consumption per worker. 
B) an increase in the capital-labor ratio and a decrease in consumption per worker. 
C) a decrease in the capital-labor ratio and a decrease in consumption per worker. 
D) a decrease in the capital-labor ratio and an increase in consumption per worker. 
A) an increase in the capital-labor ratio and an increase in consumption per worker. 
B) an increase in the capital-labor ratio and a decrease in consumption per worker. 
C) a decrease in the capital-labor ratio and a decrease in consumption per worker. 
D) a decrease in the capital-labor ratio and an increase in consumption per worker.

Question 7

Edward Denison found that labor's contribution to output growth in the United States since 1929 was attributable to all the factors below except

Accepted Answer

A) rising population. 
B) an increase in the percentage of the population in the labor force. 
C) an increase in the number of hours worked per person. 
D) higher educational levels. 
A) rising population. 
B) an increase in the percentage of the population in the labor force. 
C) an increase in the number of hours worked per person. 
D) higher educational levels.

Question 8

Which of the following is not an example of human capital formation?

Accepted Answer

A) Increases in the educational achievements of the population 
B) Increases in job skills of the labor force 
C) Improvements in the nutrition and health of the labor force 
D) Increases in the birth rate of the population 
A) Increases in the educational achievements of the population 
B) Increases in job skills of the labor force 
C) Improvements in the nutrition and health of the labor force 
D) Increases in the birth rate of the population

Question 9

All of the following are explanations of the post-1973 productivity slowdown except

Accepted Answer

A) problems in measuring productivity. 
B) changes in the legal and human environment. 
C) higher oil prices. 
D) greater competition from foreign imports. 
A) problems in measuring productivity. 
B) changes in the legal and human environment. 
C) higher oil prices. 
D) greater competition from foreign imports.

Question 10

A government policy that would reduce the saving rate is

Accepted Answer

A) eliminating the social security system. 
B) giving tax breaks to increase the real return that savers receive. 
C) increasing the government budget surplus by cutting government spending. 
D) switching the tax system to tax consumption instead of income. 
A) eliminating the social security system. 
B) giving tax breaks to increase the real return that savers receive. 
C) increasing the government budget surplus by cutting government spending. 
D) switching the tax system to tax consumption instead of income.

Question 11

In the long run,an increase in the saving rate in a steady-state economy will cause

Accepted Answer

A) an increase in the capital-labor ratio and an increase in consumption per worker. 
B) an increase in the capital-labor ratio and a decrease in consumption per worker. 
C) a decrease in the capital-labor ratio and a decrease in consumption per worker. 
D) a decrease in the capital-labor ratio and an increase in consumption per worker. 
A) an increase in the capital-labor ratio and an increase in consumption per worker. 
B) an increase in the capital-labor ratio and a decrease in consumption per worker. 
C) a decrease in the capital-labor ratio and a decrease in consumption per worker. 
D) a decrease in the capital-labor ratio and an increase in consumption per worker.

Question 12

An increase in pollution has caused a permanent increase in the rate of capital depreciation.This would cause

Accepted Answer

A) an increase in the capital-labor ratio. 
B) output per worker to fall. 
C) a decline in consumption per worker. 
D) the capital-labor ratio to be unaffected. 
A) an increase in the capital-labor ratio. 
B) output per worker to fall. 
C) a decline in consumption per worker. 
D) the capital-labor ratio to be unaffected.

Question 13

An increase in the saving rate in a steady-state economy would cause

Accepted Answer

A) a rightward movement along the saving-per-worker curve and an increase in the capital-labor ratio. 
B) an upward shift in the saving-per-worker curve and an increase in the capital-labor ratio. 
C) a downward shift in the saving-per-worker curve and a decrease in the capital-labor ratio. 
D) a leftward movement along the saving-per-worker curve and a decrease in the capital-labor ratio. 
A) a rightward movement along the saving-per-worker curve and an increase in the capital-labor ratio. 
B) an upward shift in the saving-per-worker curve and an increase in the capital-labor ratio. 
C) a downward shift in the saving-per-worker curve and a decrease in the capital-labor ratio. 
D) a leftward movement along the saving-per-worker curve and a decrease in the capital-labor ratio.

Question 14

Over the past year,productivity grew 2%,capital grew 1%,and labor grew 1%.If the elasticities of output with respect to capital and labor are 0.2 and 0.8,respectively,how much did output grow?

Accepted Answer

A) 1% 
B) 2% 
C) 3% 
D) 4% 
A) 1% 
B) 2% 
C) 3% 
D) 4%

Question 15

In a steady state

Accepted Answer

A) both consumption per worker and the capital-labor ratio are constant. 
B) consumption per worker is constant, but the capital-labor ratio can change. 
C) capital and labor, by definition, are inversely related to one another. 
D) consumption per worker can change, but the capital-labor ratio is constant. 
A) both consumption per worker and the capital-labor ratio are constant. 
B) consumption per worker is constant, but the capital-labor ratio can change. 
C) capital and labor, by definition, are inversely related to one another. 
D) consumption per worker can change, but the capital-labor ratio is constant.

Question 16

Government policies to raise the rate of productivity growth include all of the following except

Accepted Answer

A) improving infrastructure. 
B) improving forecasts of unemployment. 
C) helping build human capital by worker training programs. 
D) encouraging research and development. 
A) improving infrastructure. 
B) improving forecasts of unemployment. 
C) helping build human capital by worker training programs. 
D) encouraging research and development.

Question 17

Over the past year,output grew 5%,capital grew 5%,and labor grew 1%.If the elasticities of output with respect to capital and labor are 0.3 and 0.7,respectively,how much did productivity grow?

Accepted Answer

A) 0)5% 
B) 1)0% 
C) 2)2% 
D) 2)8% 
A) 0)5% 
B) 1)0% 
C) 2)2% 
D) 2)8%

Question 18

All else being equal,a permanent decrease in the saving rate in a steady-state economy would cause

Accepted Answer

A) an increase in the capital-labor ratio and an increase in consumption per worker. 
B) an increase in the capital-labor ratio and a decrease in consumption per worker. 
C) a decrease in the capital-labor ratio and a decrease in consumption per worker. 
D) a decrease in the capital-labor ratio and an increase in consumption per worker. 
A) an increase in the capital-labor ratio and an increase in consumption per worker. 
B) an increase in the capital-labor ratio and a decrease in consumption per worker. 
C) a decrease in the capital-labor ratio and a decrease in consumption per worker. 
D) a decrease in the capital-labor ratio and an increase in consumption per worker.

Question 19

If the capital-labor ratio is above the Golden Rule capital-labor ratio,then in the steady state,

Accepted Answer

A) capital per worker is above its maximum. 
B) output per worker is less than it would be at the Golden Rule capital-labor ratio. 
C) investment per worker exceeds output per worker. 
D) consumption per worker is not at its maximum. 
A) capital per worker is above its maximum. 
B) output per worker is less than it would be at the Golden Rule capital-labor ratio. 
C) investment per worker exceeds output per worker. 
D) consumption per worker is not at its maximum.

Question 20

Which of the following changes would lead,according to the Solow model,to a higher level of long-run output per worker?

Accepted Answer

A) A lower level of capital per worker 
B) An increase in the saving rate 
C) A rise in the rate of population growth 
D) A decrease in productivity 
A) A lower level of capital per worker 
B) An increase in the saving rate 
C) A rise in the rate of population growth 
D) A decrease in productivity

The level of the capital-labor ratio that maximizes consumption per worker in the steady state is known as the

Over the past year,productivity grew 1%,capital grew 0%,and labor grew 5%.If the elasticities of output with respect to capital and labor are 0.4 and 0.6,respectively,how much did output grow?

Suppose the current level of output is 5000.A 10% increase in productivity would increase the current level of output to

Which of the following best describes a steady state?

In the long run,a reduction in productivity will cause

Edward Denison found that labor's contribution to output growth in the United States since 1929 was attributable to all the factors below except

Which of the following is not an example of human capital formation?

All of the following are explanations of the post-1973 productivity slowdown except

A government policy that would reduce the saving rate is

In the long run,an increase in the saving rate in a steady-state economy will cause

An increase in pollution has caused a permanent increase in the rate of capital depreciation.This would cause

An increase in the saving rate in a steady-state economy would cause

Over the past year,productivity grew 2%,capital grew 1%,and labor grew 1%.If the elasticities of output with respect to capital and labor are 0.2 and 0.8,respectively,how much did output grow?

In a steady state

Government policies to raise the rate of productivity growth include all of the following except

Over the past year,output grew 5%,capital grew 5%,and labor grew 1%.If the elasticities of output with respect to capital and labor are 0.3 and 0.7,respectively,how much did productivity grow?

All else being equal,a permanent decrease in the saving rate in a steady-state economy would cause

If the capital-labor ratio is above the Golden Rule capital-labor ratio,then in the steady state,

Which of the following changes would lead,according to the Solow model,to a higher level of long-run output per worker?

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Productivity, output, and Employment

Consumption, saving, and Investment

Saving and Investment in the Open Economy

The Asset Market, money, and Prices

Business Cycles

The Is-Lmad-As Model

Classical Business Cycle Analysis

Keynesianism: the Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Exchange Rates, business Cycles, and Macroeconomic Policy in the Open Economy

Monetary Policy and the Federal Reserve System

Government Spending and Its Financing

Filters

Exam 6: Long-Run Economic Growth

The level of the capital-labor ratio that maximizes consumption per worker in the steady state is known as the

Over the past year,productivity grew 1%,capital grew 0%,and labor grew 5%.If the elasticities of output with respect to capital and labor are 0.4 and 0.6,respectively,how much did output grow?

Suppose the current level of output is 5000.A 10% increase in productivity would increase the current level of output to

Which of the following best describes a steady state?

In the long run,a reduction in productivity will cause

Edward Denison found that labor's contribution to output growth in the United States since 1929 was attributable to all the factors below except

Which of the following is not an example of human capital formation?

All of the following are explanations of the post-1973 productivity slowdown except

A government policy that would reduce the saving rate is

In the long run,an increase in the saving rate in a steady-state economy will cause

An increase in pollution has caused a permanent increase in the rate of capital depreciation.This would cause

An increase in the saving rate in a steady-state economy would cause

Over the past year,productivity grew 2%,capital grew 1%,and labor grew 1%.If the elasticities of output with respect to capital and labor are 0.2 and 0.8,respectively,how much did output grow?

In a steady state

Government policies to raise the rate of productivity growth include all of the following except

Over the past year,output grew 5%,capital grew 5%,and labor grew 1%.If the elasticities of output with respect to capital and labor are 0.3 and 0.7,respectively,how much did productivity grow?

All else being equal,a permanent decrease in the saving rate in a steady-state economy would cause

If the capital-labor ratio is above the Golden Rule capital-labor ratio,then in the steady state,

Which of the following changes would lead,according to the Solow model,to a higher level of long-run output per worker?

Introduction to Macroeconomics

The Measurement and Structure of the National Economy

Productivity, output, and Employment

Consumption, saving, and Investment

Saving and Investment in the Open Economy

The Asset Market, money, and Prices

Business Cycles

The Is-Lmad-As Model

Classical Business Cycle Analysis

Keynesianism: the Macroeconomics of Wage and Price Rigidity

Unemployment and Inflation

Exchange Rates, business Cycles, and Macroeconomic Policy in the Open Economy

Monetary Policy and the Federal Reserve System

Government Spending and Its Financing

Filters