Exam 2 Flashcards
The Solow Model and its production function finds that the marginal productivity of capital (MPK) is higher in ____________ compared to _________________
LDCs; DCs
One of the implications of the Solow Model and its production function is that capital should flow from __________ to ___________.
DCs to LDCs
If the settler mortality rate was high, the institutions tended to be
worse
If the settler mortality rate was low, the institutions tended to be
Better
A market legitimizing institution would be
unemployment insurance
A market creating institution would be
legal systems
A country’s labor force grows 2.4% but its capital stock grows 3 %, assume that capital share of output is 1/3. If the economy grows 4.21 %, by what percentage does TFP (total factor productivity) grow (all the numbers in percentages below) ?
1.61
A country’s labor force grows 2.4% but its capital stock grows 3 %, assume that capital share of output is 1/3. If the economy grows 3.6 %, by what percentage does TFP (total factor productivity) grow (all the numbers in percentages below) ?
1
Diamond believes that the advantage of Europe was that the continent
runs east-west
Diamond believes that a disadvantage of the African continent was that it
runs north south
Krugman believes that the East Asian countries grew because of
Increase in use of factors
Krugman believes the East Asian countries grew because of all the following reasons except for
Increase in productivity
The “Solow Residual” represents
Total Factor Productivity (TFP)
The Solow Model finds that if the savings rate (s) increases then
(y = Y/L)
y goes up but no effect on long run growth
Overall, why did Diamond believe Europeans or “the West” were the first ones to rise economically ?
A lucky coincidence of different factors
Jared Diamond argues that the reasons why the colonial powers
dominated was due to guns, germs, and steel because
Run east to west
Which of the following is the correct combination of bodies of
information used to answer the question of guns, germs and steel?
b. Social science, botany, zoology and microbiology
Which development was not required to build emerging technology, writing, centralized government structures, economic specialization, and social stratification?
a. Sedentary populous societies
b. Storable food surpluses
c. Ability to feed producers and others with full-time roles
d. A chief and preliminary social structure
d. A chief and preliminary social structure
What is the geographic pattern Diamond discovered in regard to
diffusion of the 9 regions?
Rapid spread along east/west axes and slower spread among
north/south axes
The higher the settler mortality rate
more extractive the colonial state
Which variable does the Colonial Origin theory use to determine current performance?
Settler Mortality Rate
If a country had a high settler mortality rate, what is the outcome?
Extractive States and Worse Current Institutions
Examples of “Neo-Europes” include all of the following EXCEPT
A. Congo
b. New Zealand
c. Canada
d. Australia
A. Congo
A market creating institution would be
a. property rights
b. unemployment insurance
c. The Federal Reserve
d. The Anti-Monopoly Government Institutions
A. property rights
Which of the following factors is a core determinant of growth?
a. Capital accumulation
b. Labor accumulation
c. Productivity growth
d. All of the above
D. All of the above
Economists think that economic growth depends fundamentally on all of the following EXCEPT:
a. factor accumulation
b. inequality
c. efficiency
d. technological change
b. inequality
In the “the miracle of sausage makers, Krugman believes that for the East Asian tigers to grow in the long run they must increase
Total Factor Productivity (TFP)
There was some pushback about Krugman’s observation on how the East Asian countries grew. These included:
A. All of these answers are true
B.TFP is not actually measured well, it is a residual so there are inaccuracies
c. Early on mobilization of K and L occurs in development, efficiency concerns loom later on
d. One cannot compare Singapore to Soviet Union, Singapore produces much more diversified set of goods.
A. All of these answers are true
The central idea of Engel’s Law is that rising family incomes cause
A decline in the proportion of the budget spent on food.
Which of the following is the MOST likely to be a backward linkage for
books ?
a. e-books
b. the plastic sector
c. bookstores
d. paper industry
D. paper industry
Is the “export” sector a good sector for government intervention ?
No because the private sector would enter on its own here
An unbalanced growth strategy is justified because:
LDCs have limited resources
Lewis believes that ____________ moves from ______________ to
_____________
labor; rural; urban
Surplus labor would mean all of the following except
a. diminishing returns to labor
b. flat portion on the production function
c. remove laborers without reducing output
d. marginal product of labor is zero
a. diminishing returns to labor
Lewis assumes that all labor that moves
Is employed
In the end, Lewis model prediction value lies in
that after a point wages will rise in the agricultural sector
A backward linkage for a shoe factory is ____________________
because its’ inputs reaches back to other industries
Leather
Engel’s Law explains in part why as economies grow, the agricultural contribution falls because Engel’s Law
states that because Engel’s Law states that as incomes grow, the proportion of income spent on food falls.
Sectors in which the government should intervene, according to the linkages-balanced growth literature are all the export sectors.
True or false?
False
The unbalanced growth argument views that the government should
intervene in only a few sectors and focus on those.
True or False?
True
As predicted by Lewis, many cities in LDCs have successfully absorbed the surplus labor of rural areas.
True or False?
False
In terms of urbanization, the fewest number of LDCs wanted to
Maintain Migration
A forward linkage for timber is
furniture from IKEA
In the first turning point (or the Lewis Turning Point) in the Lewis model
Wages rise in the agricultural sector
In the Rosenstein-Rodan shoe factory model, the market failure may occur because
all industries may not simultaneously grow
All of the following predict or find non-convergence (i.e. divergence)
except for:
a. New growth theories
b. The test of absolute convergence
c. Solow’s growth model
d. Actually all predict non-convergence
Solow’s Growth Model
The largest contributor to the growth rate in many developing countries
like China and Pakistan is (are)
c. sectoral shifts from agriculture to nonagriculture
At the second turning point in the Lewis Model, countries would
increase
Outsourcing
When developing countries were asked about migration from rural to urban areas, the majority wanted to
Lower Migration
