Question 1

An increase in the growth rate of population in a steady-state economy would cause

Accepted Answer

A) a parallel shift upward in the investment line. 
B) a pivot up and to the left in the investment line. 
C) a pivot down and to the right in the investment line. 
D) a parallel shift downward in the investment line. 
A) a parallel shift upward in the investment line. 
B) a pivot up and to the left in the investment line. 
C) a pivot down and to the right in the investment line. 
D) a parallel shift downward in the investment line.

Question 2

In the Solow model,if k = 8,y = 24,and s = 0.25,what is c?

Accepted Answer

A) 24 
B) 20 
C) 18 
D) 12 
A) 24 
B) 20 
C) 18 
D) 12

Question 3

In the textbook model of endogenous growth,long-run output growth would increase 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 4

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 5

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 6

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 7

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 8

The elasticity of output with respect to capital

Accepted Answer

A) is the increase in output resulting from an increase in the capital stock. 
B) is the percentage increase in output resulting from a 1 % increase in the capital stock. 
C) is always greater than one. 
D) is the inverse of the elasticity of output with respect to labor. 
A) is the increase in output resulting from an increase in the capital stock. 
B) is the percentage increase in output resulting from a 1 % increase in the capital stock. 
C) is always greater than one. 
D) is the inverse of the elasticity of output with respect to labor.

Question 9

According to the Solow model,an increase in the capital-labor ratio will

Accepted Answer

A) always reduce steady state consumption per worker. 
B) always increase steady state consumption per worker. 
C) reduce steady state consumption per worker if the capital-labor ratio is below the Golden rule capital stock. 
D) increase steady state consumption per worker if the capital-labor ratio is below the Golden rule capital stock. 
A) always reduce steady state consumption per worker. 
B) always increase steady state consumption per worker. 
C) reduce steady state consumption per worker if the capital-labor ratio is below the Golden rule capital stock. 
D) increase steady state consumption per worker if the capital-labor ratio is below the Golden rule capital stock.

Question 10

Which of the following would be a useful way to increase the saving rate?

Accepted Answer

A) Tax breaks to increase the real return that savers receive 
B) Increasing taxes if Ricardian equivalence holds 
C) Increasing government spending 
D) Increasing taxes on capital goods 
A) Tax breaks to increase the real return that savers receive 
B) Increasing taxes if Ricardian equivalence holds 
C) Increasing government spending 
D) Increasing taxes on capital goods

Question 11

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 12

In the Solow model,if f(k)= 2k0.5,s = 0.25,n = 0.05,and d = 0.2,what is the value of k at equilibrium?

Accepted Answer

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

Question 13

The per-worker production function in the Solow model assumes

Accepted Answer

A) constant returns to scale and increasing marginal productivity of capital. 
B) constant returns to scale and diminishing marginal productivity of capital. 
C) increasing returns to scale and diminishing marginal productivity of capital. 
D) decreasing returns to scale and diminishing marginal productivity of capital. 
A) constant returns to scale and increasing marginal productivity of capital. 
B) constant returns to scale and diminishing marginal productivity of capital. 
C) increasing returns to scale and diminishing marginal productivity of capital. 
D) decreasing returns to scale and diminishing marginal productivity of capital.

Question 14

Between 1870 and 2008,among the United States,Germany,Japan,and Australia,________ grew at the fastest rate and ________ grew at the slowest rate.

Accepted Answer

A) United States; Germany 
B) Germany; United States 
C) Australia; Japan 
D) Japan; Australia 
A) United States; Germany 
B) Germany; United States 
C) Australia; Japan 
D) Japan; Australia

Question 15

An earthquake destroys a good portion of the capital stock.How would you expect this to affect the capital-labor ratio in the long run? There would be

Accepted Answer

A) a rightward movement along the saving-per-worker curve and an increase in the capital-labor ratio. 
B) no change in the long-run 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) no change in the long-run 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 16

Use the growth accounting equation to calculate productivity growth,given output growth of 3.5%,capital stock growth of 5%,labor employment growth of 2%,the output elasticity of capital of 0.3,and the output elasticity of labor of 0.7.

Accepted Answer

The growth accounting equation is ?Y/Y =

Question 17

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 18

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)sf (k)= (n + d)k,so 0.2 × 5

Question 19

What happens in the steady state to the capital-labor ratio,output per worker,and consumption per worker when each of the following events occur? You should assume that the steady-state capital-labor ratio is below the Golden Rule level.
(a)Productivity falls.
(b)Population growth falls.
(c)The saving rate falls.
(d)The depreciation rate falls.

Accepted Answer

(a) k,y,and c all fa

Question 20

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.

An increase in the growth rate of population in a steady-state economy would cause

In the Solow model,if k = 8,y = 24,and s = 0.25,what is c?

In the textbook model of endogenous growth,long-run output growth would increase 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 0.3 and 0.7,respectively,how much did productivity grow?

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 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.

The elasticity of output with respect to capital

According to the Solow model,an increase in the capital-labor ratio will

Which of the following would be a useful way to increase the saving rate?

In a steady state

In the Solow model,if f(k)= 2k0.5,s = 0.25,n = 0.05,and d = 0.2,what is the value of k at equilibrium?

The per-worker production function in the Solow model assumes

Between 1870 and 2008,among the United States,Germany,Japan,and Australia, grew at the fastest rate and grew at the slowest rate.

An earthquake destroys a good portion of the capital stock.How would you expect this to affect the capital-labor ratio in the long run? There would be

Use the growth accounting equation to calculate productivity growth,given output growth of 3.5%,capital stock growth of 5%,labor employment growth of 2%,the output elasticity of capital of 0.3,and the output elasticity of labor of 0.7.

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

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-LM/AD-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

An increase in the growth rate of population in a steady-state economy would cause

In the Solow model,if k = 8,y = 24,and s = 0.25,what is c?

In the textbook model of endogenous growth,long-run output growth would increase 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 0.3 and 0.7,respectively,how much did productivity grow?

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 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.

The elasticity of output with respect to capital

According to the Solow model,an increase in the capital-labor ratio will

Which of the following would be a useful way to increase the saving rate?

In a steady state

In the Solow model,if f(k)= 2k0.5,s = 0.25,n = 0.05,and d = 0.2,what is the value of k at equilibrium?

The per-worker production function in the Solow model assumes

Between 1870 and 2008,among the United States,Germany,Japan,and Australia,________ grew at the fastest rate and ________ grew at the slowest rate.

An earthquake destroys a good portion of the capital stock.How would you expect this to affect the capital-labor ratio in the long run? There would be

Use the growth accounting equation to calculate productivity growth,given output growth of 3.5%,capital stock growth of 5%,labor employment growth of 2%,the output elasticity of capital of 0.3,and the output elasticity of labor of 0.7.

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

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-LM/AD-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

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

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.

Between 1870 and 2008,among the United States,Germany,Japan,and Australia, grew at the fastest rate and grew at the slowest rate.