macro chapter 9

In the two-sector endogenous growth model, income growth persists because: A) the production function shifts exogenously. B) the saving rate exceeds the rate of depreciation. C) the creation of knowledge in universities never slows down. D) the fraction of the labor force in universities is large.

c

Schumpeter's thesis of "creative destruction" is an explanation of economic progress resulting from: A) using up scarce natural resources to create new products. B) breaking down barriers to trade and development. C) new product producers driving incumbent producers out of business. D) creating new methods to destroy the environment.

c

Public policies in the United States designed to stimulate technological progress do not include: A) tax breaks to encourage homeownership. B) the temporary monopoly granted by the patent system. C) tax breaks for research and development. D) subsidies given by the National Science Foundation.

a

In the two-sector endogenous growth model, the saving rate (s) affects the steady-state: A) level of income. B) growth rate of income. C) level of income and growth rate of income. D) growth rate of the stock of knowledge.

a

52. The endogenous growth model's assumption of constant returns to capital is more plausible if capital is defined to include: A) plant and equipment. B) knowledge. C) depreciation. D) technology.

b

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

If the per-worker production function is y = Ak, where A is a positive constant, then the marginal product of capital: A) increases as k increases. B) is constant as k increases. C) decreases as k increases. D) cannot be measured in this case.

b

In the Solow growth model, capital exhibits ______ returns. In the basic endogenous growth model, capital exhibits ______ returns. A) constant; diminishing B) constant; constant C) diminishing; constant D) diminishing; diminishing

c

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

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

d

In the two-sector endogenous growth model, the steady-state stock of physical capital is determined by _____, and the growth in the stock of knowledge is determined by _____. A) the fraction of labor in universities; the saving rate B) the efficiency of labor; the saving rate C) the production function; the efficiency of labor D) the saving rate; the fraction of labor in universities

d