Question 1

An alternative to Prescott's explanation of the cyclical behaviour of the Solow residual is that it is the result of:

Accepted Answer

A)  labour hoarding in recession and cyclical mismeasurement of output.
B)  bad weather, strict environmental regulations, and oil shocks.
C)  declines in capital utilization and labour force participation.
D)  technology shocks.E) B) and D)
F) A) and D)

Question 2

What is balanced growth? Give an example.

Accepted Answer

The Solow model predicts that technologi...

Question 3

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 _____.

Accepted Answer

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 growthE) None of the above
F) B) and D)

Question 4

What is the efficiency of labour? How does technological progress effect efficiency of labour?

Accepted Answer

The efficiency of labour describes how e...

Question 5

Who proposed the concept of "creative destruction"? What does this concept mean?

Accepted Answer

Schumpeter proposed the theory...

Question 6

The assumption that technological progress increases the efficiency of labour is called:

Accepted Answer

A)  endogenous technological progress.
B)  the efficiency-wage model of economic growth.
C)  labour-augmenting technological progress.
D)  the Golden Rule model of economic growth.E) None of the above
F) A) and B)

Question 7

The efficiency of labour:

Accepted Answer

A)  is the marginal product of labour.
B)  is the rate of growth of the labour force.
C)  depends on the knowledge, health, and skills of labour.
D)  equals output per worker.E) B) and D)
F) A) and D)

Question 8

The Solow model predicts that two economies will converge if their economies have the same:

Accepted Answer

A)  capital stocks.
B)  populations.
C)  steady states.
D)  production functions.E) B) and C)
F) None of the above

Question 9

Economic research shows that _____ in explaining international differences in living standards.

Accepted Answer

A)  physical capital is more important than human capital
B)  human capital is at least as important as physical capital
C)  human capital is much more important than physical capital
D)  infrastructure is the most important factorE) All of the above
F) B) and C)

Question 10

When capital increases by ΔK units, output increases by:

Accepted Answer

A)  ΔL units.
B)  MPL × ΔL units.
C)  ΔK units.
D)  MPK × ΔK units.E) None of the above
F) A) and D)

Question 11

The number of effective workers takes into account the number of workers and the:

Accepted Answer

A)  amount of capital available to each worker.
B)  rate of growth of the number of workers.
C)  efficiency of each worker.
D)  saving rate of each worker.E) B) and D)
F) A) and B)

Question 12

Over the past 50 years in Canada:

Accepted Answer

A)  output per worker hour, capital stock per worker hour, the real wage, and the real rental price of capital have all increased about 2 percent per year.
B)  output per worker hour, the real wage, and the real rental price of capital have all increased about 2 percent per year, whereas capital stock per worker hour has increased faster.
C)  output per worker hour and the real wage have both increased about 2 percent per year, whereas capital stock per worker hour has increased faster and the real rental price of capital has remained about the same.
D)  output per worker hour, the real wage, and capital stock per worker hour have all increased about 2 percent per year, whereas the real rental price of capital has remained about the same.E) None of the above
F) A) and B)

Question 13

Assume that an economy described by the Solow model is in a steady state with output and capital growing at 3 percent and labour growing at 1 percent. The capital share is 0.3. The growth-accounting equation indicates that the contributions to growth of capital, labour, and total factor productivity are:

Accepted Answer

A)  0 percent, 1 percent, and 2 percent, respectively.
B)  0.3 percent, 0.7 percent, and 2 percent, respectively.
C)  0.9 percent, 0.7 percent, and 1.4 percent, respectively.
D)  1.8 percent, 0.3 percent, and 0.9 percent, respectively.E) B) and D)
F) B) and C)

Question 14

In a steady state with population growth and technological progress:

Accepted Answer

A)  the real rental price of capital is constant and the real wage grows at the rate of technological progress.
B)  the real rental price of capital grows at the rate of technological progress and the real wage is constant.
C)  both the real rental price of capital and the real wage grow at the rate of technological progress.
D)  both the real rental price of capital and the real wage are constant.E) A) and B)
F) C) and D)

Question 15

Explain how the Solow growth model differs from models of endogenous growth with respect to:
a.the sources of technological progress.
b.returns to capital.

Accepted Answer

a.The Solow growth model assumes technol...

Question 16

The Solow residual equals the percentage change in output:

Accepted Answer

A)  plus the percentage changes in factor inputs weighted by each factor's share of output.
B)  minus the percentage changes in prices of factor inputs.
C)  minus the percentage changes in factor inputs weighted by each factor's share of output.
D)  plus the percentage changes in each factor's share of output.E) C) and D)
F) A) and B)

Question 17

In the two-sector endogenous growth model, the fraction of labour in universities (u)  affects the steady-state:

Accepted Answer

A)  level of income.
B)  growth rate of income.
C)  level of income and growth rate of income.
D)  level of income, growth rate of income, and growth rate of the stock of knowledge.E) All of the above
F) C) and D)

Question 18

The rate of growth of labour productivity (Y / L)  may be expressed as the rate of growth of total factor productivity:

Accepted Answer

A)  plus the capital share multiplied by the rate of growth of the capital-labour ratio.
B)  minus the capital share multiplied by the rate of growth of the capital-labour ratio.
C)  plus the rate of growth of capital productivity.
D)  minus the rate of growth of capital productivity.E) A) and B)
F) A) and C)

Question 19

In the Solow growth model with population growth and labour-augmenting technological change, the break-even level of investment must cover:

Accepted Answer

A)  depreciating capital.
B)  depreciating capital and capital for new workers.
C)  depreciating capital and capital for new effective workers.
D)  depreciating capital, capital for new workers, and capital for new effective workers.E) C) and D)
F) A) and C)

Question 20

Suggest three explanations for the difference in labour productivity between Canada and the United States in the 1990s and early 2000s.

Accepted Answer

Possible explanations include: faster ad...

Exam 9: Economic Growth II: Technology, Empirics, and Policy

When capital increases by ΔK units, output increases by:

Correct Answer
verified

What is the efficiency of labour? How does technological progress effect efficiency of labour?

Correct Answer
verified
The efficiency of labour describes how e...
View Answer

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 _.

Correct Answer
verified

The Solow residual equals the percentage change in output:

Correct Answer
verified

Suggest three explanations for the difference in labour productivity between Canada and the United States in the 1990s and early 2000s.

Correct Answer
verified
Possible explanations include: faster ad...
View Answer

The number of effective workers takes into account the number of workers and the:

Correct Answer
verified

In a steady state with population growth and technological progress:

Correct Answer
verified

Explain how the Solow growth model differs from models of endogenous growth with respect to: a.the sources of technological progress. b.returns to capital.

Correct Answer
verified
a.The Solow growth model assumes technol...
View Answer

Over the past 50 years in Canada:

Correct Answer
verified

Economic research shows that _____ in explaining international differences in living standards.

Correct Answer
verified

The efficiency of labour:

Correct Answer
verified

Who proposed the concept of "creative destruction"? What does this concept mean?

Correct Answer
verified
Schumpeter proposed the theory...
View Answer

In the Solow growth model with population growth and labour-augmenting technological change, the break-even level of investment must cover:

Correct Answer
verified

What is balanced growth? Give an example.

Correct Answer
verified
The Solow model predicts that technologi...
View Answer

Correct Answer
verified

An alternative to Prescott's explanation of the cyclical behaviour of the Solow residual is that it is the result of:

Correct Answer
verified

The Solow model predicts that two economies will converge if their economies have the same:

Correct Answer
verified

In the two-sector endogenous growth model, the fraction of labour in universities (u) affects the steady-state:

Correct Answer
verified

The assumption that technological progress increases the efficiency of labour is called:

Correct Answer
verified

The rate of growth of labour productivity (Y / L) may be expressed as the rate of growth of total factor productivity:

Correct Answer
verified

Exam 9: Economic Growth II: Technology, Empirics, and Policy

When capital increases by ΔK units, output increases by:

Correct AnswerverifiedShow Answer

What is the efficiency of labour? How does technological progress effect efficiency of labour?

Correct AnswerverifiedThe efficiency of labour describes how e...View AnswerShow Answer

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 _____.

Correct AnswerverifiedShow Answer

The Solow residual equals the percentage change in output:

Correct AnswerverifiedShow Answer

Suggest three explanations for the difference in labour productivity between Canada and the United States in the 1990s and early 2000s.

Correct AnswerverifiedPossible explanations include: faster ad...View AnswerShow Answer

The number of effective workers takes into account the number of workers and the:

Correct AnswerverifiedShow Answer

In a steady state with population growth and technological progress:

Correct AnswerverifiedShow Answer

Explain how the Solow growth model differs from models of endogenous growth with respect to: a.the sources of technological progress. b.returns to capital.

Correct Answerverifieda.The Solow growth model assumes technol...View AnswerShow Answer

Over the past 50 years in Canada:

Correct AnswerverifiedShow Answer

Economic research shows that _____ in explaining international differences in living standards.

Correct AnswerverifiedShow Answer

The efficiency of labour:

Correct AnswerverifiedShow Answer

Who proposed the concept of "creative destruction"? What does this concept mean?

Correct AnswerverifiedSchumpeter proposed the theory...View AnswerShow Answer

In the Solow growth model with population growth and labour-augmenting technological change, the break-even level of investment must cover:

Correct AnswerverifiedShow Answer

What is balanced growth? Give an example.

Correct AnswerverifiedThe Solow model predicts that technologi...View AnswerShow Answer

Correct AnswerverifiedShow Answer

An alternative to Prescott's explanation of the cyclical behaviour of the Solow residual is that it is the result of:

Correct AnswerverifiedShow Answer

The Solow model predicts that two economies will converge if their economies have the same:

Correct AnswerverifiedShow Answer

In the two-sector endogenous growth model, the fraction of labour in universities (u) affects the steady-state:

Correct AnswerverifiedShow Answer

The assumption that technological progress increases the efficiency of labour is called:

Correct AnswerverifiedShow Answer

The rate of growth of labour productivity (Y / L) may be expressed as the rate of growth of total factor productivity:

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
The efficiency of labour describes how e...
View Answer

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 _.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Possible explanations include: faster ad...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
a.The Solow growth model assumes technol...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
Schumpeter proposed the theory...
View Answer

Correct Answer
verified

Correct Answer
verified
The Solow model predicts that technologi...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
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Correct Answer
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