Question 1

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

Accepted Answer

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

Question 2

The Solow growth model predicts that aggregate output

Accepted Answer

A)  will grow at the rate of the labour force growth in the long run. 
B)  will grow at the rate of the population growth in the long run. 
C)  will grow at the rate of the growth in capital per worker in the long run. 
D)  will grow at the rate of the growth in income per worker in the long run. 
E)  will be maximized in the long run. 
A)  will grow at the rate of the labour force growth in the long run. 
B)  will grow at the rate of the population growth in the long run. 
C)  will grow at the rate of the growth in capital per worker in the long run. 
D)  will grow at the rate of the growth in income per worker in the long run. 
E)  will be maximized in the long run.

Question 3

Total factor productivity growth involves

Accepted Answer

A)  spending on national defence and the environment. 
B)  research and development by firms, education, and training on the job. 
C)  increasing the size of government. 
D)  increasing consumption per worker and income per worker. 
E)  favourable government policies. 
A)  spending on national defence and the environment. 
B)  research and development by firms, education, and training on the job. 
C)  increasing the size of government. 
D)  increasing consumption per worker and income per worker. 
E)  favourable government policies.

Question 4

In the equation describing the accumulation of human capital,H' = b(1-u)H,the parameter b determines

Accepted Answer

A)  the efficiency of the educational sector. 
B)  the efficiency of human capital. 
C)  physical capital accumulation. 
D)  the level of human capital in equilibrium. 
E)  the growth rate of the labour force in equilibrium. 
A)  the efficiency of the educational sector. 
B)  the efficiency of human capital. 
C)  physical capital accumulation. 
D)  the level of human capital in equilibrium. 
E)  the growth rate of the labour force in equilibrium.

Question 5

The marginal product of human capital

Accepted Answer

A)  rises as human capital rises. 
B)  falls as human capital falls. 
C)  does not fall as human capital falls. 
D)  does not fall as human capital rises. 
E)  is constant. 
A)  rises as human capital rises. 
B)  falls as human capital falls. 
C)  does not fall as human capital falls. 
D)  does not fall as human capital rises. 
E)  is constant.

Question 6

Human capital accumulation is different from physical capital accumulation in that

Accepted Answer

A)  human capital costs more to acquire. 
B)  human capital is less productive. 
C)  there is no limit to human knowledge or how productive individuals can become. 
D)  human capital suffers from diminishing marginal returns. 
E)  physical capital has higher returns. 
A)  human capital costs more to acquire. 
B)  human capital is less productive. 
C)  there is no limit to human knowledge or how productive individuals can become. 
D)  human capital suffers from diminishing marginal returns. 
E)  physical capital has higher returns.

Question 7

Human capital is

Accepted Answer

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

Question 8

What are the major factors affecting standards of living and economic development across nations?

Accepted Answer

There are many factors that influence th

Question 9

The endogenous growth models were characterized by

Accepted Answer

A)  Friedman and Lucas. 
B)  Parente and Prescott. 
C)  Lucas and Romer. 
D)  Solow. 
E)  Malthus. 
A)  Friedman and Lucas. 
B)  Parente and Prescott. 
C)  Lucas and Romer. 
D)  Solow. 
E)  Malthus.

Question 10

A primary deficiency of the Solow growth model is that

Accepted Answer

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

Question 11

Investment in education will be more productive if

Accepted Answer

A)  the size of government increases. 
B)  if labour supply falls. 
C)  if it is combined with better research and development and patent policies. 
D)  if education is underprovided. 
E)  if educational attainment statistics warrant it. 
A)  the size of government increases. 
B)  if labour supply falls. 
C)  if it is combined with better research and development and patent policies. 
D)  if education is underprovided. 
E)  if educational attainment statistics warrant it.

Question 12

What explains the differences in standards of living across countries?

Accepted Answer

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

Question 13

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)and b represents the efficiency of human capital accumulation.The growth rate of human capital equals

Accepted Answer

A)  u(1 - b) - 1. 
B)  1 + b(1 - u). 
C)  (1 + b)(1 - u). 
D)  b(1 - u) - 1. 
E)  b(1 - u)2. 
A)  u(1 - b) - 1. 
B)  1 + b(1 - u). 
C)  (1 + b)(1 - u). 
D)  b(1 - u) - 1. 
E)  b(1 - u)2.

Question 14

If monopoly power is not protected by government,

Accepted Answer

A)  firms must develop and implement new technologies to increase productivity. 
B)  firms must lobby for protection. 
C)  other barriers to technology adoption will emerge. 
D)  a country's standard of living will decline. 
E)  firms have no incentive to innovate and increase productivity. 
A)  firms must develop and implement new technologies to increase productivity. 
B)  firms must lobby for protection. 
C)  other barriers to technology adoption will emerge. 
D)  a country's standard of living will decline. 
E)  firms have no incentive to innovate and increase productivity.

Question 15

According to the Solow model,differences in standards of living across countries is explained by

Accepted Answer

A)  differences in labour supply. 
B)  differences in population growth. 
C)  differences in total factor productivity. 
D)  different barriers to technology adoption. 
E)  different steady states. 
A)  differences in labour supply. 
B)  differences in population growth. 
C)  differences in total factor productivity. 
D)  different barriers to technology adoption. 
E)  different steady states.

Question 16

Romer's model of endogenous growth is

Accepted Answer

A)  consistent with evidence of convergence in the richer countries and consistent with evidence of convergence in the poorer countries. 
B)  consistent with evidence of convergence in the richer countries and inconsistent with evidence of convergence in the poorer countries. 
C)  inconsistent with evidence of convergence in the richer countries and consistent with evidence of convergence in the poorer countries. 
D)  inconsistent with evidence of convergence in the richer countries and inconsistent with evidence of convergence in the poorer countries. 
E)  only consistent with evidence of convergence in the richer countries. 
A)  consistent with evidence of convergence in the richer countries and consistent with evidence of convergence in the poorer countries. 
B)  consistent with evidence of convergence in the richer countries and inconsistent with evidence of convergence in the poorer countries. 
C)  inconsistent with evidence of convergence in the richer countries and consistent with evidence of convergence in the poorer countries. 
D)  inconsistent with evidence of convergence in the richer countries and inconsistent with evidence of convergence in the poorer countries. 
E)  only consistent with evidence of convergence in the richer countries.

Question 17

What can governments do to promote economic development in light of technology adoption barriers?

Accepted Answer

A)  allow population growth rates to increase 
B)  improve the environment 
C)  increase government spending 
D)  promote free trade 
E)  promote labour unions 
A)  allow population growth rates to increase 
B)  improve the environment 
C)  increase government spending 
D)  promote free trade 
E)  promote labour unions

Question 18

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

Accepted Answer

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

Question 19

Barriers to Riches,by S.Parente and E.Prescott,emphasizes the importance of

Accepted Answer

A)  barriers to technological adoption. 
B)  barriers to the development of natural resources. 
C)  public education. 
D)  endogenous growth. 
E)  free trade. 
A)  barriers to technological adoption. 
B)  barriers to the development of natural resources. 
C)  public education. 
D)  endogenous growth. 
E)  free trade.

Question 20

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

Accepted Answer

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

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

The Solow growth model predicts that aggregate output

Total factor productivity growth involves

In the equation describing the accumulation of human capital,H' = b(1-u)H,the parameter b determines

The marginal product of human capital

Human capital accumulation is different from physical capital accumulation in that

Human capital is

What are the major factors affecting standards of living and economic development across nations?

The endogenous growth models were characterized by

A primary deficiency of the Solow growth model is that

Investment in education will be more productive if

What explains the differences in standards of living across countries?

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)and b represents the efficiency of human capital accumulation.The growth rate of human capital equals

If monopoly power is not protected by government,

According to the Solow model,differences in standards of living across countries is explained by

Romer's model of endogenous growth is

What can governments do to promote economic development in light of technology adoption barriers?

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

Barriers to Riches,by S.Parente and E.Prescott,emphasizes the importance of

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

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

A Two-Period Model: The Consumption–Savings 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

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

The Solow growth model predicts that aggregate output

Total factor productivity growth involves

In the equation describing the accumulation of human capital,H' = b(1-u)H,the parameter b determines

The marginal product of human capital

Human capital accumulation is different from physical capital accumulation in that

Human capital is

What are the major factors affecting standards of living and economic development across nations?

The endogenous growth models were characterized by

A primary deficiency of the Solow growth model is that

Investment in education will be more productive if

What explains the differences in standards of living across countries?

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)and b represents the efficiency of human capital accumulation.The growth rate of human capital equals

If monopoly power is not protected by government,

According to the Solow model,differences in standards of living across countries is explained by

Romer's model of endogenous growth is

What can governments do to promote economic development in light of technology adoption barriers?

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

Barriers to Riches,by S.Parente and E.Prescott,emphasizes the importance of

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

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behavior: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

A Two-Period Model: The Consumption–Savings 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