Question 1

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

Accepted Answer

A) improving infrastructure. 
B) encouraging research and development. 
C) reducing the government budget surplus. 
D) improving human capital development. 
A) improving infrastructure. 
B) encouraging research and development. 
C) reducing the government budget surplus. 
D) improving human capital development.

Question 2

An increase in population growth will lead to a ________ in the steady-state capital-labor ratio and a ________ in output per worker.

Accepted Answer

A) fall; fall 
B) fall; rise 
C) rise; rise 
D) rise; fall 
A) fall; fall 
B) fall; rise 
C) rise; rise 
D) rise; fall

Question 3

Suppose the current level of output is 5000.If the elasticities of output with respect to capital and labor are 0.3 and 0.7,respectively,a 10% increase in capital combined with a 5% increase in labor and a 5% increase in productivity would increase the current level of output to

Accepted Answer

A) 5015. 
B) 5325. 
C) 5575. 
D) 6000. 
A) 5015. 
B) 5325. 
C) 5575. 
D) 6000.

Question 4

A productivity improvement will 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 5

Over the past year,productivity grew 1%,capital grew 2%,and labor grew 2%.If the elasticities of output with respect to capital and labor are 0.3 and 0.7,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 6

Country A has a capital-labor ratio that is initially twice as big as that of country B,but neither is yet in a steady state.Both countries have the same production function,f(k)= 6k1/2.Country A has a 10% saving rate,10% population growth rate,and 5% depreciation rate,while country B has a 20% saving rate,10% population growth rate,and 20% depreciation rate.
(a)Calculate the steady-state capital-labor ratio for each country.Does the initial capital-labor ratio affect your results?
(b)Calculate output per worker and consumption per worker for each country.Which country has the highest output per worker? The highest consumption per worker?

Accepted Answer

(a)Using the formula sf(k)= (n + d)k,cou

Question 7

Steady-state investment per worker is positively related to the capital-labor ratio because the higher the capital-labor ratio

Accepted Answer

A) the lower the capital depreciation rate. 
B) the greater the amount of resources available for capital investment. 
C) the more investment per worker is required to replace depreciating capital. 
D) the less the economy needs to equip new workers with the same high level of capital. 
A) the lower the capital depreciation rate. 
B) the greater the amount of resources available for capital investment. 
C) the more investment per worker is required to replace depreciating capital. 
D) the less the economy needs to equip new workers with the same high level of capital.

Question 8

In the absence of productivity growth,in a steady-state economy

Accepted Answer

A) output per worker and consumption per worker remain constant over time. 
B) output per worker remains constant over time, but consumption per worker grows over time. 
C) output per worker grows over time, but consumption per worker remains constant over time. 
D) output per worker and consumption per worker both grow over time. 
A) output per worker and consumption per worker remain constant over time. 
B) output per worker remains constant over time, but consumption per worker grows over time. 
C) output per worker grows over time, but consumption per worker remains constant over time. 
D) output per worker and consumption per worker both grow over time.

Question 9

In the textbook model of endogenous growth,long-run output growth would decline if there were either a ________ in the saving rate or a ________ in the depreciation rate.

Accepted Answer

A) rise; rise 
B) rise; fall 
C) fall; rise 
D) fall; fall 
A) rise; rise 
B) rise; fall 
C) fall; rise 
D) fall; fall

Question 10

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 0.5 and 0.5,respectively,how much did productivity grow?

Accepted Answer

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

Question 11

Over the past year,output grew 4%,capital grew 2%,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) 2)0% 
B) 2)7% 
C) 3)0% 
D) 3)3% 
A) 2)0% 
B) 2)7% 
C) 3)0% 
D) 3)3%

Question 12

Describe the main ideas of endogenous growth theory.What does it have to say about the role of government in economic growth?

Accepted Answer

Endogenous growth theory explains the ma

Question 13

A decrease in population growth will lead to a ________ in the steady-state capital-labor ratio and a ________ in output per worker.

Accepted Answer

A) fall; fall 
B) fall; rise 
C) rise; rise 
D) rise; fall 
A) fall; fall 
B) fall; rise 
C) rise; rise 
D) rise; fall

Question 14

A country has the per-worker production function
yt = 5,   
where yt is output per worker and kt is the capital-labor ratio.The depreciation rate is 0.2 and the population growth rate is 0.05.The saving function is
St = 0.2Yt,
where St is total national saving and Yt is total output.
(a)What is the steady-state value of the capital-labor ratio?
(b)What is the steady-state value of output per worker?
(c)What is the steady-state value of consumption per worker?

Accepted Answer

(a)s_f(k)= (n + d)k,so 0.2 × 5k^0.5

Question 15

Suppose the current level of output is 5000 and the elasticity of output with respect to labor is 0.7.A 10% increase in labor would increase the current level of output to

Accepted Answer

A) 5035. 
B) 5070. 
C) 5350. 
D) 5700. 
A) 5035. 
B) 5070. 
C) 5350. 
D) 5700.

Question 16

A country has the per-worker production function
yt = 6,   
where yt is output per worker and kt is the capital-labor ratio.The depreciation rate is 0.1 and the population growth rate is 0.1.The saving function is
St = 0.1Yt,
where St is total national saving and Yt is total output.
(a)What is the steady-state value of capital-labor ratio?
(b)What is the steady-state value of output per worker?
(c)What is the steady-state value of consumption per worker?

Accepted Answer

(a)s_f(k)= (n + d)k,so 0.1 × 6k^2/3

Question 17

In the Solow model,if f(k)= 2k0.5,s = 0.3,n = 0.05,and d = 0.15,what is the value of k at equilibrium?

Accepted Answer

A) 1 
B) 3 
C) 6 
D) 9 
A) 1 
B) 3 
C) 6 
D) 9

Question 18

Labor productivity increased so much in the second half of the 1990s because of

Accepted Answer

A) improved information and communications technologies. 
B) higher levels of educational attainment by workers. 
C) cheaper foreign imports used in production. 
D) increased foreign competition. 
A) improved information and communications technologies. 
B) higher levels of educational attainment by workers. 
C) cheaper foreign imports used in production. 
D) increased foreign competition.

Question 19

A new pollution law requires businesses to pay for inspections of their plants by independent pollution-monitoring firms.What effect is this likely to have?

Accepted Answer

A) Increase productivity 
B) Increase the capital stock 
C) Reduce productivity 
D) Increase the demand for labor in those firms 
A) Increase productivity 
B) Increase the capital stock 
C) Reduce productivity 
D) Increase the demand for labor in those firms

Question 20

In the Solow model,if saving per worker initially exceeds investment per worker,

Accepted Answer

A) the economy will experience inflation. 
B) the capital-labor ratio will increase. 
C) investment per worker will decline. 
D) saving per worker will decline. 
A) the economy will experience inflation. 
B) the capital-labor ratio will increase. 
C) investment per worker will decline. 
D) saving per worker will decline.

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

An increase in population growth will lead to a in the steady-state capital-labor ratio and a in output per worker.

Suppose the current level of output is 5000.If the elasticities of output with respect to capital and labor are 0.3 and 0.7,respectively,a 10% increase in capital combined with a 5% increase in labor and a 5% increase in productivity would increase the current level of output to

A productivity improvement will cause

Over the past year,productivity grew 1%,capital grew 2%,and labor grew 2%.If the elasticities of output with respect to capital and labor are 0.3 and 0.7,respectively,how much did output grow?

Steady-state investment per worker is positively related to the capital-labor ratio because the higher the capital-labor ratio

In the absence of productivity growth,in a steady-state economy

In the textbook model of endogenous growth,long-run output growth would decline if there were either a in the saving rate or a in the depreciation rate.

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 0.5 and 0.5,respectively,how much did productivity grow?

Over the past year,output grew 4%,capital grew 2%,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?

Describe the main ideas of endogenous growth theory.What does it have to say about the role of government in economic growth?

A decrease in population growth will lead to a in the steady-state capital-labor ratio and a in output per worker.

Suppose the current level of output is 5000 and the elasticity of output with respect to labor is 0.7.A 10% increase in labor would increase the current level of output to

In the Solow model,if f(k)= 2k^0.5,s = 0.3,n = 0.05,and d = 0.15,what is the value of k at equilibrium?

Labor productivity increased so much in the second half of the 1990s because of

A new pollution law requires businesses to pay for inspections of their plants by independent pollution-monitoring firms.What effect is this likely to have?

In the Solow model,if saving per worker initially exceeds investment 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

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

An increase in population growth will lead to a ________ in the steady-state capital-labor ratio and a ________ in output per worker.

Suppose the current level of output is 5000.If the elasticities of output with respect to capital and labor are 0.3 and 0.7,respectively,a 10% increase in capital combined with a 5% increase in labor and a 5% increase in productivity would increase the current level of output to

A productivity improvement will cause

Over the past year,productivity grew 1%,capital grew 2%,and labor grew 2%.If the elasticities of output with respect to capital and labor are 0.3 and 0.7,respectively,how much did output grow?

Steady-state investment per worker is positively related to the capital-labor ratio because the higher the capital-labor ratio

In the absence of productivity growth,in a steady-state economy

In the textbook model of endogenous growth,long-run output growth would decline if there were either a ________ in the saving rate or a ________ in the depreciation rate.

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 0.5 and 0.5,respectively,how much did productivity grow?

Over the past year,output grew 4%,capital grew 2%,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?

Describe the main ideas of endogenous growth theory.What does it have to say about the role of government in economic growth?

A decrease in population growth will lead to a ________ in the steady-state capital-labor ratio and a ________ in output per worker.

Suppose the current level of output is 5000 and the elasticity of output with respect to labor is 0.7.A 10% increase in labor would increase the current level of output to

In the Solow model,if f(k)= 2k0.5,s = 0.3,n = 0.05,and d = 0.15,what is the value of k at equilibrium?

Labor productivity increased so much in the second half of the 1990s because of

A new pollution law requires businesses to pay for inspections of their plants by independent pollution-monitoring firms.What effect is this likely to have?

In the Solow model,if saving per worker initially exceeds investment 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

An increase in population growth will lead to a in the steady-state capital-labor ratio and a in output per worker.

In the textbook model of endogenous growth,long-run output growth would decline if there were either a in the saving rate or a in the depreciation rate.

A decrease in population growth will lead to a in the steady-state capital-labor ratio and a in output per worker.

In the Solow model,if f(k)= 2k^0.5,s = 0.3,n = 0.05,and d = 0.15,what is the value of k at equilibrium?