revision questions chapter 22 pt2

Question 1

According to the classical growth theory of Thomas Malthus

Answer 1

increases in real GDP per person are only temporary.

Question 2

The aggregate production function describes how

Answer 2

inputs and technology are combined to produce output.

Question 3

If the saving rate increases, the country’s growth rate of capital per hour of labour ________ and real GDP per hour of labour ________.

Answer 3

increases; increases

Question 4

Neoclassical growth theory assumes the productivity curve exhibits

Answer 4

diminishing returns to capital per hour of labour

Question 5

The productivity curve is a relationship between

Answer 5

real GDP per hour of labour and capital per hour of labour, with technology held constant

Question 6

According to Robert Solow’s one-third rule, if both capital per hour of labour and real GDP per hour of labour grow by 3 per cent a year, then we can conclude that

Answer 6

technological change contributed 2 per cent to growth in real GDP per hour of labour.

Question 7

Neoclassical growth theory proposes that

Answer 7

real GDP per person grows because technological change increases the demand for capital.

Question 8

fact

Answer 8

The growth rate of real GDP per person accelerated in the 1980s and 1990s.

Question 9

Which of the following statements about growth theories is correct?
Question 9Select one:

A.
In neoclassical growth theory, technological progress is the result of rapid increases in saving and investment in capital per person.

B.
In classical growth theory physical resources are unlimited.

C.
In the new growth theory, knowledge is not subject to diminishing returns.

D.
In classical growth theory, real GDP per person is unrelated to the subsistence real wage rate.

Answer 9

In the new growth theory, knowledge is not subject to diminishing returns.

Question 10

Which statement regarding productivity growth is NOT correct?
Question 10Select one:

A.
Labour productivity is defined as real GDP per hour of labour.

B.
Productivity growth in the United Kingdom was more rapid from 1960 to 1973 than between 1973 and 1979.

C.
From 1979 to 2003, labour productivity grew at an annual average rate of a bit more than 2 per cent.

D.
Labour productivity growth is due mostly to growth in capital per hour of labour.

Answer 10

D.
Labour productivity growth is due mostly to growth in capital per hour of labour.