Chapter 3

Question 1

Technological progress can lead to:

Answer 1

larger quantities of output for given quantities of capital and labor.
better products.
new products.
a large variety of products.

Question 2

Sate of technology (A)

Answer 2

variable that tells us how much output can be produced from given amounts of capital and labor at any time.

Question 3

Technology (𝑨) is assumed

Answer 3

to be labor enhancing or labor augmenting

Question 4

technological progress in two equivalent ways:

Answer 4

Technological progress reduces the number of workers needed to produce a given amount of output.
Technological progress increases the output that can be produced with a given number of workers.

Question 5

production function with technology function

Answer 5

𝐾𝛼(𝐴𝑁)1−𝛼

Question 6

𝒈𝑨

Answer 6

technological progress is exogenous

Question 7

output per worker growth rate

Answer 7

positive

Question 8

𝑮𝒓𝒐𝒘𝒕𝒉 𝒓𝒂𝒕𝒆 𝒐𝒇 𝒐𝒖𝒕𝒑𝒖𝒕 𝒑𝒆𝒓 𝒘𝒐𝒓𝒌𝒆𝒓 𝒂𝒕 𝒔𝒕𝒆𝒂𝒅𝒚 𝒔𝒕𝒂𝒕𝒆 𝒊𝒔 𝒆𝒒𝒖𝒂𝒍

Answer 8

𝒈𝑨

Question 9

With technological progress

Answer 9

output per worker continues to rise even when the economy reaches its steady state.

Question 10

Capital per worker in steady state / Capital per effective worker in steady state.

Answer 10

does not change

Question 11

Output per worker change in steady state/ Output per effective worker in steady state.

Answer 11

Does not change

Output per worker grows at: gA

Question 12

Total output … at the rate of population growth in steady state/ Total output… at steady state at the rate of:

Answer 12

grows

of 𝒈𝑨 + 𝒈𝑵

Question 13

Changes in the saving rate do

Answer 13

do increase the steady-state level of output per effective worker.

Question 14

Labor force is split into two groups (function and def)

Answer 14

with one group focused on current output production (e.g., manufacturing production or performing day-to-day service activities) and the other group focused on innovation or R&D type activities:
𝑵 = 𝑵𝑨 + 𝑵𝒀

Question 15

Fishing Out” Effect

Answer 15

if many easy breakthroughs have already been made, it gets harder and harder to make new revolutionary discoveries, then 𝟎 < 𝝋

Question 16

Standing on the Shoulder of Giants” Effect:

Answer 16

the greater the existing stock of knowledge, the easier it is to achieve new breakthroughs, then 𝝋 > 𝟏

Question 17

Decreasing returns to scale for 𝑵𝑨

Answer 17

Assume 𝟎 < 𝜸 < 𝟏; thus, if R&D effort is boosted in the economy, technological progress improves. However, due to some duplication of effort (and some dead-end research), the growth rate of technology will be less than the increase in 𝑵𝑨.

Question 18

h

Answer 18

h