Practise Quiz 3 Flashcards
Q1 - The efficiency of labour:
A - Is the marginal product of labour
B - Is the rate of growth of the labour force
C - Includes the knowledge, health, and skills of labour
D - Equals output per worker
C - Includes the knowledge, health, and skills of labour
Q2 - If the labour force is growing at a 3% rate and the efficiency of a unit of labour is growing at a 2% rate, then the number of effective workers is growing at a rate of:
A - 2%
B - 3%
C - 5%
D - 6%
C - 5%
Q3 - In the Solow growth model, the steady state growth rate of output per effective worker is ___, and the steady state growth rate of output per actual worker is ___
A - The sum of the rate of technological progress plus the rate of population growth; zero
B - Zero; the rate of technological progress
C - Zero; zero
D - The rate of technological progress; the rate of population growth
B - Zero; the rate of technological progress
Q4 - In a steady state economy with the population growth n and labour augmenting technological progress g, persistent increases in standards of living are possible because the:
A - Capital stock grows faster than does the labour force
B - Capital stock grows faster than does the number of effective workers
C - Rate of depreciation constantly decreases
D - Saving rate constantly increases
A - Capital stock grows faster than does the labour force
Q5 - In the Solow model with technological change, the Golden Rule level of capital is the steady state that maximizes:
A - Output per worker
B - Output per effective worker
C - Consumption per worker
D - Consumption per effective worker
B - Consumption per effective worker
Q6 - With population growth at rate n and labor-augmenting technological progress at rate g, the Golden Rule steady state requires that the marginal product of capital (MPK):
A - Net of depreciation be equal to n + g
B - net of depreciation be equal to the depreciation rate plus n + g
C - Plus n be equal to the depreciation rate plus g
D - Plus g be equal to the depreciation rate plus n
A - Net of depreciation be equal to n + g
Q7 - The balanced growth property of the Solow growth model with population growth and technological progress predicts which of the following sets of variables will grow at the same rate in the steady state?
A - Output per effective worker, capital per effective worker, real wage
B - Output per worker, capital per worker, real wage
C - Real rental price of capital, real wage, output per worker
D - Capital output ratio, output per worker, capital per worker
B - Output per worker, capital per worker, real wage
Q8 - In a Solow model with technological change, if population grows at a 2 percent rate and the efficiency of labor grows at a 3 percent rate, then in the steady state, output per actual worker grows at a ______ percent rate.
A - 0
B - 2
C - 3
D - 5
C - 3
Q9 - Empirical investigations into whether differences in income per person are the result of differences in the quantities of the factors of production available or differences in the efficiency with which the factors are employed typically find:
A - A negative correlation between the quantity of factors and the efficiency of use
B - A positive correlation between the quantity of factors and the efficiency of use
C - No correlation between the quantity of factors and the efficiency of use
D - Large gaps between the quantity of factors accumulated and the efficiency of use
B - A positive correction between the quantity of factors and the efficiency of use
Q10 - The preponderance of empirical evidence supports the hypothesis that economies that are open to trade _____ than comparable closed economies.
A - Grow more rapidly
B - Have lower steady-state levels of income per worker due to foreign competition
C - Have faster rates of population growth and technological progress
D - Converge more slowly to a steady-state equilibrium
A - Grow more rapidly
Q11 - If the marginal product of capital net depreciation equals 8 percent, the rate of growth of population equals 2 percent, and the rate of labor-augmenting technical progress equals 2 percent, to reach the Golden Rule level of the capital stock, the ____ rate in this economy must be _____.
A - Saving; increased
B - Population growth; decreased
C - Depreciation; decreased
D - Total output growth; decreased
A - Saving; increased
Q12 - The type of legal system and the level of corruption in a country have been found to be:
A - Unrelated to the rate of economic growth in a country
B - Significant determinants of the rate of economic growth in a country
C - Important topics for political discussion, but not economic explanations of growth
D - Important variables explaining the Golden Rule level of capital
B - Significant determinants of the rate of economic growth in a country
Q13 - One explanation for greater economic development in moderate versus tropical climates is that institutions established by colonial settlers in moderate climates ______, while institutions established by colonists in tropical climates ______.
A - Were based on English common law; were based on the Napoleonic Code
B - Were based on the Napoleonic Code; were based on English common law
C - Protected property rights; were extractive and authoritarian
D - Were extractive and authoritarian; protected property rights
C - Protected property rights; were extractive and authoritarian
Q14 - In the Solow growth model, technological change is ______, whereas in endogenous growth theories, technological change is ______.
A - Assumed; explained
B - Explained; assumed
C - Persistent; constant
D - Constant; persistent
A - Assumed; explained
Q15 - In the basic endogenous growth model, income can grow forever—even without exogenous technological progress—because:
A - The saving rate equals the rate of depreciation
B - The saving rate exceeds the rate of depreciation
C - capital does not exhibit diminishing returns
D - Capital exhibits diminishing returns
C - Capital does not exhibit diminishing returns
