Question 1

In the context of the Solow model,new ideas cause both cutting-edge growth and catching-up growth to occur over time.

Accepted Answer

A) True 
 B)False  True

Question 2

In 2010,GDP per capita in the United States grew by 2.2%.In the same year,GDP per capita in China grew by almost:

Accepted Answer

A)  2%. 
B)  5%. 
C)  7%. 
D)  10%. 
A)  2%. 
B)  5%. 
C)  7%. 
D)  10%. D

Question 3

The Solow model implies that countries farther away from their steady states will grow slower than countries closer to their steady states.

Accepted Answer

A) True 
 B)False  False

Question 4

The Solow growth model features _____ returns to physical capital.

Accepted Answer

A)  decreasing 
B)  constant 
C)  increasing 
D)  no 
A)  decreasing 
B)  constant 
C)  increasing 
D)  no

Question 5

China's growth will eventually slow as the marginal product of capital falls.

Accepted Answer

A) True 
 B)False

Question 6

The number of new ideas does NOT depend on the:

Accepted Answer

A)  level of capital invested. 
B)  number of people involved. 
C)  incentive to innovate. 
D)  number of ideas per hour each person has. 
A)  level of capital invested. 
B)  number of people involved. 
C)  incentive to innovate. 
D)  number of ideas per hour each person has.

Question 7

The number of potential ideas in the world is:

Accepted Answer

A)  limited. 
B)  about the same as the number of actual ideas. 
C)  somewhat larger than the number of current ideas. 
D)  unimaginably vast. 
A)  limited. 
B)  about the same as the number of actual ideas. 
C)  somewhat larger than the number of current ideas. 
D)  unimaginably vast.

Question 8

Based on the Solow model,an earthquake that destroys half the capital stock in a country will decrease growth in the years following the disaster.

Accepted Answer

A) True 
 B)False

Question 9

An economy with production function Y = F(K)= that has 400 units of capital will produce _____ units of output.

Accepted Answer

A)  1,600 
B)  400 
C)  40 
D)  20 
A)  1,600 
B)  400 
C)  40 
D)  20

Question 10

The source of "cutting-edge" growth is:

Accepted Answer

A)  investment in physical capital. 
B)  education and training to build human capital. 
C)  advances in technological knowledge. 
D)  foreign investment. 
A)  investment in physical capital. 
B)  education and training to build human capital. 
C)  advances in technological knowledge. 
D)  foreign investment.

Question 11

Explain why the marginal product of capital diminishes as more and more capital is used.

Accepted Answer

The marginal product of capital is the i

Question 12

The key to keeping the economy growing in the long run is:

Accepted Answer

A)  investment in physical capital. 
B)  education and training to build human capital. 
C)  advances in technological knowledge. 
D)  foreign investment. 
A)  investment in physical capital. 
B)  education and training to build human capital. 
C)  advances in technological knowledge. 
D)  foreign investment.

Question 13

Which should lead to an increased rate of economic growth due to increased development of new ideas?

Accepted Answer

A)  increased population 
B)  increased consumer wealth 
C)  larger markets 
D)  Increased population,increased wealth,and larger markets 
A)  increased population 
B)  increased consumer wealth 
C)  larger markets 
D)  Increased population,increased wealth,and larger markets

Question 14

According to the Solow model,an increase in the fraction of output that is saved will increase _____ in the long run.

Accepted Answer

A)  investment 
B)  output 
C)  both investment and output 
D)  neither investment nor output 
A)  investment 
B)  output 
C)  both investment and output 
D)  neither investment nor output

Question 15

According to the Solow model,a country will grow faster when its capital stock is:

Accepted Answer

A)  at the steady-state value. 
B)  above the steady-state value. 
C)  just below the steady-state value. 
D)  far below the steady-state value. 
A)  at the steady-state value. 
B)  above the steady-state value. 
C)  just below the steady-state value. 
D)  far below the steady-state value.

Question 16

Institutions that are important to the development of knowledge and new ideas include a well-functioning market system,property rights,and granting patents.

Accepted Answer

A) True 
 B)False

Question 17

The increase in world population will likely lead to an increase in ideas for production.

Accepted Answer

A) True 
 B)False

Question 18

A good is nonrivalrous if more than one person can use it at the same time without impeding someone else's use of the good.

Accepted Answer

A) True 
 B)False

Question 19

If a country is currently to the left of its steady-state capital stock in the Solow model,growth in output will follow only if new technology can be developed to shift the production function.

Accepted Answer

A) True 
 B)False

Question 20

Investment is the process by which new capital is added to an economy.

Accepted Answer

A) True 
 B)False

Exam 8: Growth,capital Accumulation

In the context of the Solow model,new ideas cause both cutting-edge growth and catching-up growth to occur over time.

In 2010,GDP per capita in the United States grew by 2.2%.In the same year,GDP per capita in China grew by almost:

The Solow model implies that countries farther away from their steady states will grow slower than countries closer to their steady states.

The Solow growth model features _____ returns to physical capital.

China's growth will eventually slow as the marginal product of capital falls.

The number of new ideas does NOT depend on the:

The number of potential ideas in the world is:

Based on the Solow model,an earthquake that destroys half the capital stock in a country will decrease growth in the years following the disaster.

An economy with production function Y = F(K)= that has 400 units of capital will produce _____ units of output.

The source of "cutting-edge" growth is:

Explain why the marginal product of capital diminishes as more and more capital is used.

The key to keeping the economy growing in the long run is:

Which should lead to an increased rate of economic growth due to increased development of new ideas?

According to the Solow model,an increase in the fraction of output that is saved will increase _____ in the long run.

According to the Solow model,a country will grow faster when its capital stock is:

Institutions that are important to the development of knowledge and new ideas include a well-functioning market system,property rights,and granting patents.

The increase in world population will likely lead to an increase in ideas for production.

A good is nonrivalrous if more than one person can use it at the same time without impeding someone else's use of the good.

If a country is currently to the left of its steady-state capital stock in the Solow model,growth in output will follow only if new technology can be developed to shift the production function.

Investment is the process by which new capital is added to an economy.

The Big Ideas

The Power of Trade

Supply and Demand

Equilibrium- How Supply and Demand

Price Ceilings and Floors

GDP and the Measurement of Progress

The Wealth of Nations and Economic Growth

Saving,investment,and the Financial System

Stock Markets and Personal Finance

Unemployment and Labor Force Participation

Inflation and the Quantity Theory of Money

Business Fluctuations

Transmission and Amplification Mechanisms

The Federal Reserve System

Monetary Policy

The Federal Budget- Taxes and Spending

Fiscal Policy

International Trade

International Finance

Political Economy and Public Choice

Filters