Introduction to Economic Growth

Question 1

What do high income levels reflect?

Answer 1

High living standards

Question 2

What does Schumpeter’s “creative destruction” theory propose?

Answer 2

Firms and individuals will be “destroyed” in the process of economic growth, because growth is brought about by the introduction of new technologies and the creation of new firms that replace existing firms and technologies

Question 3

What is The Great Divergence?

Answer 3

A term coined by Kenneth Pomeranz that refers to the massive increasing income and living standards disparity between countries

Question 4

What does the unconditional distribution of income per capita focus on?

Answer 4

Differences in income per capita, regardless of countries’ characteristics

Question 5

What does conditional distribution focus on?

Answer 5

Whether the income gap between two or more countries that are similar in observable characteristics, is closing or widening over time

Question 6

What does unconditional convergence focus on?

Answer 6

Requires the income gap between any two countries to narrow, regardless of their differences

Question 7

Which are the hypotheses that aim to explain the fundamental causes of economic growth?

Answer 7

• The geography hypothesis
• The culture hypothesis
• The ignorance hypothesis

Question 8

Which are the exogenous growth models?

Answer 8

• Solow model

- Ramsey model

Question 9

Which are the endogenous growth models?

Answer 9

• AK model
• Learning by doing model
• Two sector model
• R&D model