Question 1

Research by Solow indicated that about _____ of the increases in U.S.GDP per capita are due to better ideas.

Accepted Answer

A)  25% 
B)  50% 
C)  75% 
D)  100% 
A)  25% 
B)  50% 
C)  75% 
D)  100%

Question 2

Growth on the cutting edge is primarily about developing new ideas.

Accepted Answer

A) True 
 B)False

Question 3

If investment is greater than depreciation,an economy will be above its steady state.

Accepted Answer

A) True 
 B)False

Question 4

Diminishing returns to capital prevent capital accumulation alone from explaining sustained economic growth over time.

Accepted Answer

A) True 
 B)False

Question 5

In the Solow model production function,Y = F(A,K,eL),A stands for:

Accepted Answer

A)  aggregate demand. 
B)  assets. 
C)  attitude. 
D)  ideas. 
A)  aggregate demand. 
B)  assets. 
C)  attitude. 
D)  ideas.

Question 6

Following World War II,the United States grew faster than Germany.

Accepted Answer

A) True 
 B)False

Question 7

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

Accepted Answer

A) True 
 B)False

Question 8

In the Solow model production function,Y = F(A,K,eL),K stands for:

Accepted Answer

A)  kurtosis. 
B)  consumption. 
C)  physical capital. 
D)  human capital. 
A)  kurtosis. 
B)  consumption. 
C)  physical capital. 
D)  human capital.

Question 9

In the Solow model production function,Y = F(A,K,eL),L stands for:

Accepted Answer

A)  labor. 
B)  leisure. 
C)  liquidity. 
D)  long run. 
A)  labor. 
B)  leisure. 
C)  liquidity. 
D)  long run.

Question 10

Good institutions tend to:

Accepted Answer

A)  decrease the rate of investment. 
B)  leave the rate of investment unchanged. 
C)  increase the rate of investment. 
D)  have an ambiguous effect on investment. 
A)  decrease the rate of investment. 
B)  leave the rate of investment unchanged. 
C)  increase the rate of investment. 
D)  have an ambiguous effect on investment.

Question 11

Conditional convergence predicts that if two countries have the same steady-state level of output,the poorer country will:

Accepted Answer

A)  grow but never be able to catch up with the richer country. 
B)  catch up with the richer country because the richer country will not be able to maintain its steady-state output level. 
C)  catch up with the richer country because it will grow faster than the rich country. 
D)  not grow at all and will fall further behind the rich country. 
A)  grow but never be able to catch up with the richer country. 
B)  catch up with the richer country because the richer country will not be able to maintain its steady-state output level. 
C)  catch up with the richer country because it will grow faster than the rich country. 
D)  not grow at all and will fall further behind the rich country.

Question 12

Better ideas or technological knowledge causes:

Accepted Answer

A)  the production function to shift upward. 
B)  the production function to shift downward. 
C)  the investment function to shift downward. 
D)  the depreciation function to shift downward. 
A)  the production function to shift upward. 
B)  the production function to shift downward. 
C)  the investment function to shift downward. 
D)  the depreciation function to shift downward.

Question 13

According to the Solow model,a higher investment rate leads to:

Accepted Answer

A)  more capital and more output. 
B)  more capital and less output. 
C)  less capital and more output. 
D)  less capital and less output. 
A)  more capital and more output. 
B)  more capital and less output. 
C)  less capital and more output. 
D)  less capital and less output.

Question 14

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)  new ideas. 
D)  foreign investment. 
A)  investment in physical capital. 
B)  education and training to build human capital. 
C)  new ideas. 
D)  foreign investment.

Question 15

China is growing faster than the United States despite having inferior economic institutions.

Accepted Answer

A) True 
 B)False

Question 16

According to the Solow model,a higher investment rate leads to:

Accepted Answer

A)  an increase in steady-state output. 
B)  a decrease in steady-state output. 
C)  no change in steady-state output. 
D)  volatility in steady-state output. 
A)  an increase in steady-state output. 
B)  a decrease in steady-state output. 
C)  no change in steady-state output. 
D)  volatility in steady-state output.

Question 17

-(Figure: The Solow Model)In the accompanying graph of the Solow model,if the production function shifts from Y1 to Y2 while capital remains at K1,then the capital stock will:

Accepted Answer

A)  decrease until it reaches the new steady-state level. 
B)  increase until it reaches the new steady-state level. 
C)  increase for a time and then return to K1. 
D)  remain unchanged. 
A)  decrease until it reaches the new steady-state level. 
B)  increase until it reaches the new steady-state level. 
C)  increase for a time and then return to K1. 
D)  remain unchanged.

Question 18

A country in a steady state invests 50% of its output in new capital (F1F1F1S1F1F1F10 = 0.5)and depreciates 5% of its capital stock (F1F1F1S1F1F1F10 = .05).With a capital stock of 100 units,labor remains constant.Because of technological innovation,production improves from Y =   to Y = 2 C:\Users\user\Dropbox\Quizplus Parsing Documents\To Be Parsed\NEW Files\Answers End Chapter sent to mahdi\TB3376,Modern Principles Macroeconomics 3rd Edition by Tyler Cowen\TB3376,Modern Principles Macroeconomics 3rd Edition by Tyler Cowen\Images\Chapter 8 (28)- Growth,Capital Accumulation_18.jpg
.What is the new steady-state level of output?

Accepted Answer

A)  10 
B)  20 
C)  40 
D)  80 
A)  10 
B)  20 
C)  40 
D)  80

Question 19

Which of the following statements correctly differentiates catching-up growth from cutting-edge growth?

Accepted Answer

A)  Cutting-edge growth leads to convergence while catching-up growth does not. 
B)  Cutting-edge growth comes primarily from capital accumulation while catching-up growth comes from technological development. 
C)  Poorer countries with low levels of capital stock will always display catching-up growth while rich countries will not. 
D)  Cutting-edge growth can go on indefinitely while catching-up growth cannot. 
A)  Cutting-edge growth leads to convergence while catching-up growth does not. 
B)  Cutting-edge growth comes primarily from capital accumulation while catching-up growth comes from technological development. 
C)  Poorer countries with low levels of capital stock will always display catching-up growth while rich countries will not. 
D)  Cutting-edge growth can go on indefinitely while catching-up growth cannot.

Question 20

A small country's aggregate production function per hour of labor given by Y = K1/2.Its depreciation rate is 1% and its investment rate is 10%.What is its steady-state level of output?

Accepted Answer

A)  1 
B)  10 
C)  100 
D)  1,000 
A)  1 
B)  10 
C)  100 
D)  1,000

Research by Solow indicated that about _____ of the increases in U.S.GDP per capita are due to better ideas.

Growth on the cutting edge is primarily about developing new ideas.

If investment is greater than depreciation,an economy will be above its steady state.

Diminishing returns to capital prevent capital accumulation alone from explaining sustained economic growth over time.

In the Solow model production function,Y = F(A,K,eL),A stands for:

Following World War II,the United States grew faster than Germany.

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

In the Solow model production function,Y = F(A,K,eL),K stands for:

In the Solow model production function,Y = F(A,K,eL),L stands for:

Good institutions tend to:

Conditional convergence predicts that if two countries have the same steady-state level of output,the poorer country will:

Better ideas or technological knowledge causes:

According to the Solow model,a higher investment rate leads to:

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

China is growing faster than the United States despite having inferior economic institutions.

According to the Solow model,a higher investment rate leads to:

-(Figure: The Solow Model)In the accompanying graph of the Solow model,if the production function shifts from Y₁ to Y₂ while capital remains at K₁,then the capital stock will:

Which of the following statements correctly differentiates catching-up growth from cutting-edge growth?

A small country's aggregate production function per hour of labor given by Y = K^1/2.Its depreciation rate is 1% and its investment rate is 10%.What is its steady-state level of output?

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

Exam 8: Growth,capital Accumulation

Research by Solow indicated that about _____ of the increases in U.S.GDP per capita are due to better ideas.

Growth on the cutting edge is primarily about developing new ideas.

If investment is greater than depreciation,an economy will be above its steady state.

Diminishing returns to capital prevent capital accumulation alone from explaining sustained economic growth over time.

In the Solow model production function,Y = F(A,K,eL),A stands for:

Following World War II,the United States grew faster than Germany.

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

In the Solow model production function,Y = F(A,K,eL),K stands for:

In the Solow model production function,Y = F(A,K,eL),L stands for:

Good institutions tend to:

Conditional convergence predicts that if two countries have the same steady-state level of output,the poorer country will:

Better ideas or technological knowledge causes:

According to the Solow model,a higher investment rate leads to:

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

China is growing faster than the United States despite having inferior economic institutions.

According to the Solow model,a higher investment rate leads to:

-(Figure: The Solow Model)In the accompanying graph of the Solow model,if the production function shifts from Y1 to Y2 while capital remains at K1,then the capital stock will:

Which of the following statements correctly differentiates catching-up growth from cutting-edge growth?

A small country's aggregate production function per hour of labor given by Y = K1/2.Its depreciation rate is 1% and its investment rate is 10%.What is its steady-state level of output?

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

-(Figure: The Solow Model)In the accompanying graph of the Solow model,if the production function shifts from Y₁ to Y₂ while capital remains at K₁,then the capital stock will:

A small country's aggregate production function per hour of labor given by Y = K^1/2.Its depreciation rate is 1% and its investment rate is 10%.What is its steady-state level of output?