Blanchard Chapter 12

52) Refer to the information above. Given this information, the steady state rate of growth of Y/NA is A) 0. B) 2%. C) 3%. D) 5%. E) 16%.

A) 0.

20) The rate of growth of output per worker in the United States between 1950 and 2009 was approximately equal to which of the following? A) 1.9% B) 3.8% C) 4.8% D) 5.8%

A) 1.9%

28) Assume that an economy experiences both positive population growth and technological progress. In this economy, which of the following is constant when balanced growth is achieved? A) I B) S C) Y/N D) all of the above E) none of the above

A) I B) S C) Y/N D) all of the above E) none of the above Answer: E

58) Which country had the highest rate of technological progress from 1985 to 2009? A) Japan B) France C) United States D) United Kingdom

A) Japan

27) Assume that an economy experiences both positive population growth and technological progress. In this economy, which of the following is constant when balanced growth is achieved? A) K B) NA C) K/N D) Y/NA E) none of the above

A) K B) NA C) K/N D) Y/NA E) none of the above Answer: D

36) Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that A) S/NA = (δ + gA + gN)K/NA. B) S/NA = (gA + gN)K/NA. C) I/NA = (δ)K/NA. D) I = δK. E) none of the above

A) S/NA = (δ + gA + gN)K/NA.

14) Which of the following will cause a reduction in the steady-state growth rate of output per worker? A) a reduction in the saving rate B) an increase in the population growth rate C) an increase in the rate of depreciation D) an increase in the saving rate E) none of the above

A) a reduction in the saving rate B) an increase in the population growth rate C) an increase in the rate of depreciation D) an increase in the saving rate E) none of the above Answer: E

42) Research suggests that the relatively higher rate of growth of output per capita between in China between 1995 and 2007 was the result of which of the following? A) an increase in the rate of technological progress B) an increase in K/NA C) an increase in the rate of growth of N D) an increase in the saving rate E) both A and D

A) an increase in the rate of technological progress B) an increase in K/NA C) an increase in the rate of growth of N D) an increase in the saving rate E) both A and D Answer: E

56) Which of the following will cause an increase in the steady-state growth rate of output per worker? A) an increase in the saving rate B) a reduction in the population growth rate C) a reduction in the rate of depreciation D) a reduction in the saving rate E) none of the above Which of the following will cause an increase in the steady-state growth rate of output per worker?

A) an increase in the saving rate B) a reduction in the population growth rate C) a reduction in the rate of depreciation D) a reduction in the saving rate E) none of the above Answer: E

47) The method of constructing a measure of technological progress relies on which of the following assumptions? A) each factor of production is paid its marginal product B) population growth does not change C) population growth is zero D) the saving rate does note change

A) each factor of production is paid its marginal product

33) Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that the output per effective worker ratio (Y/NA) is A) growing at a rate of 0. B) growing at a rate of gA + gN. C) growing at a rate of gN. D) growing at a rate of gA. E) none of the above

A) growing at a rate of 0.

32) Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that the capital per effective worker ratio (K/NA) is A) growing at a rate of δ + gA + gN. B) growing at a rate of gA + gN. C) growing at a rate of gN. D) growing at a rate of gA. E) none of the above

A) growing at a rate of δ + gA + gN.

16) Suppose there is an increase in the saving rate. This increase in the saving rate will cause an increase in which of the following once the economy reaches its new steady state equilibrium? A) growth rate of output B) growth rate of capital C) growth rate of capital per worker D) all of the above E) none of the above

A) growth rate of output B) growth rate of capital C) growth rate of capital per worker D) all of the above E) none of the above Answer: E

57) Suppose there is a reduction in the saving rate. This decrease in the saving rate will cause a reduction in which of the following once the economy reaches its new steady state equilibrium? A) growth rate of output B) growth rate of capital C) growth rate of capital per worker D) all of the above E) none of the above

A) growth rate of output B) growth rate of capital C) growth rate of capital per worker D) all of the above E) none of the above Answer: E

48) Let α represent labor's share of total output. The Solow residual is represented by A) gy - [αgN + (1 - α)gK]. B) gy. C) gK. D) αgN. E) 1/(1-α).

A) gy - [αgN + (1 - α)gK].

26) Which of the following represents a dimension of technological progress? A) larger quantities of output for given quantities of capital and labor B) better products C) a larger variety of products D) new products E) all of the above

A) larger quantities of output for given quantities of capital and labor B) better products C) a larger variety of products D) new products E) all of the above Answer: E

44) Which of the following is hypothesized to explain the reduction in the rate of technological progress? A) measurement error B) the increase in the size of the service sector C) a reduction in R&D spending D) all of the above E) none of the above

A) measurement error B) the increase in the size of the service sector C) a reduction in R&D spending D) all of the above E) none of the above Answer: D

55) Assume that an economy experiences both positive population growth and technological progress. A reduction in the saving rate will cause A) no change in K/NA. B) a permanent reduction in the rate of growth of output per worker. C) a permanent reduction in the rate of growth of output. D) no change in Y/NA. E) none of the above

A) no change in K/NA. B) a permanent reduction in the rate of growth of output per worker. C) a permanent reduction in the rate of growth of output. D) no change in Y/NA. E) none of the above Answer: E

46) Which of the following can help explain the technology gap that exists between some countries? A) poorly established property rights B) political instability C) the relative absence of entrepreneurs D) all of the above E) none of the above

A) poorly established property rights B) political instability C) the relative absence of entrepreneurs D) all of the above E) none of the above Answer: D

2) Which of the following best describes a situation where research is considered appropriable? A) research that is well suited to its commercial purpose B) research that is easily copied by another firm C) research that translates into many new products D) all of the above E) none of the above

A) research that is well suited to its commercial purpose B) research that is easily copied by another firm C) research that translates into many new products D) all of the above E) none of the above Answer: D

1) Which of the following best describes a situation where research is considered relatively fertile? A) research that translates into many new products B) research that costs the firms relatively little money C) research that cannot be easily copied by other firms D) all of the above E) none of the above

A) research that translates into many new products

40) Patents represent A) the protection given to new products by the law. B) how R&D spending translates into new ideas. C) the extent to which firms benefit from the results of their own R&D spending. D) the rate of technological progress.

A) the protection given to new products by the law.

41) The rate of growth of output per capita for the United States and France between 1950 and 2004 has been caused by A) the rate of technological progress. B) the saving rate. C) the accumulation of capital. D) the rate of growth of N.

A) the rate of technological progress.

5) In the following production function, Y = f(K, NA), suppose A increases by 20%. This 20% increase in A implies that A) the same output can be produced with 20% less labor. B) the effective quantity of labor has increased by 20%. C) output will increase by less than 20%. D) all of the above E) both A and C.

A) the same output can be produced with 20% less labor. B) the effective quantity of labor has increased by 20%. C) output will increase by less than 20%. D) all of the above E) both A and C. Answer: D

17) Suppose output per worker in a country has grown at the same rate as technology over for many years. This country's growth would be described as A) "appropriable" growth. B) "balanced" growth. C) "effective" growth. D) "diffuse" growth. E) none of the above

B) "balanced" growth.

25) In 1965, Gordon Moore predicted that the number of transistors in a chip would double approximately every A) 6-12 months. B) 18-24 months. C) five years. D) 10 years. E) none of the above

B) 18-24 months.

12) Refer to the information above. Which of the following represents the steady-state growth rate of output per worker in this economy? A) 2% B) 3% C) 5% D) 10% E) 15%

B) 3%

24) From 1995 to 2007, the rate of growth of output per worker in China has been approximately equal to A) 5% B) 9% C) 15% D) 18% E) 23%

B) 9%

6) In the production function Y = f(K, NA), for a given state of technology, constant returns to scale implies that output (Y) will increase by 7% when A) K or NA increase by 7%. B) K and N increase by 7%. C) N or A increase by 7%. D) N and A increase by 7%. E) all of the above

B) K and N increase by 7%.

29) Which of the following is NOT constant when balanced growth is obtained? A) Y/NA B) NA C) K/NA D) all of the above E) none of the above

B) NA

13) Which of the following will cause an increase in the steady-state growth rate of capital? A) an increase in the saving rate B) an increase in the population growth rate C) a temporary increase in technological progress D) all of the above E) none of the above

B) an increase in the population growth rate

4) In the following production function, Y = f(K, NA), a 20% increase in A will cause which of the following variables to increase by 20%? A) labor B) effective labor C) output D) output per worker E) none of the above

B) effective labor

31) Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that output (Y) is A) constant. B) growing at a rate of gA + gN. C) growing at a rate of gN. D) growing at a rate of gA. E) growing at a rate of gA - gN.

B) growing at a rate of gA + gN.

39) Which of the following represents the fertility of research? A) the protection given to new products by the law B) how R&D spending translates into new ideas C) the extent to which firms benefit from the results of their own R&D spending D) the rate of technological progress E) both B and C

B) how R&D spending translates into new ideas

22) Moore's law refers to which of the following? A) the steady state rate of growth of output per capita will equal the rate of growth of technological progress. B) the number of transistors in a chip would double approximately every 18-24 months. C) the steady state rate of growth of output per effective worker will be zero. D) the saving rate that maximizes steady state consumption is .5 (s = 0.5). E) none of the above

B) the number of transistors in a chip would double approximately every 18-24 months.

21) From 1978 to 1995, the rate of growth of output per worker in China appears to be A) the result of capital accumulation. B) the result of technological progress. C) the result of trade barriers. D) equal to that of the United States. E) none of the above

B) the result of technological progress.

49) Let α represent labor's share of total output. The Solow residual is, therefore, represented by A) αgy. B) αgA. C) αgK. D) αgN. E) 1/α.

B) αgA.

37) Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that growth rate of K/NA is A) gA gN. B) gA + gN. C) 0. D) gA. E) none of the above

C) 0.

53) Refer to the information above. Given this information, the steady state rate of growth of output per worker is A) 0. B) 2%. C) 3%. D) 5%. E) 16%.

C) 3%.

11) Refer to the information above. Which of the following represents the steady-state growth rate of output in this economy? A) 2% B) 3% C) 5% D) 10% E) 15%

C) 5%

8) Refer to the information above. Which of the following equals the annual growth rate of "effective labor" in the steady state in this economy? A) 2% B) 3% C) 5% D) 10%

C) 5%

43) Convergence of output per capita across countries has come from A) a convergence of saving rates. B) a convergence of the accumulation of capital. C) higher technological progress from the countries that started behind. D) all of the above

C) higher technological progress from the countries that started behind.

8) High growth in the rich countries from 1950 to 2009 was most likely due to A) a high savings rate. B) high capital accumulation. C) technological progress. D) high consumption rates. E) monetary policy. kely due to

C) technological progress.

38) Which of the following represents the appropriability of research? A) the protection given to new products by the law B) how R&D spending translates into new ideas C) the extent to which firms benefit from the results of their own R&D spending D) the rate of technological progress E) both B and C

C) the extent to which firms benefit from the results of their own R&D spending

15) Which of the following is always true after an economy reaches a balanced growth equilibrium? A) the growth rate of output equals the rate of depreciation B) population growth is zero C) the growth rate of capital is equal to the growth rate of the effective work force D) the growth rate of capital is equal to the savings rate E) none of the above

C) the growth rate of capital is equal to the growth rate of the effective work force

9) Refer to the information above. Which of the following represents the level of investment needed to maintain a constant capital stock (K) in this economy? A) .02K B) .03K C) .05K D) .10K E) .15K

D) .10K

50) Refer to the information above. Given this information, we know that effective labor (NA) grows at which rate? A) 0 B) 1% C) 4% D) 5% E) 15%

D) 5%

54) Refer to the information above. Given this information, the steady state rate of growth of output is A) 0. B) 2%. C) 3%. D) 5%. E) 16%.

D) 5%.

19) Which of the following countries had the highest rate of growth of output per worker between 1950 and 2009? A) France B) Japan C) United States D) United Kingdom

D) United Kingdom

45) Based on recent research, which of the following is the most likely cause of the reduction in the rate of technological progress? A) measurement error B) the increase in the size of the service sector C) a reduction in R&D spending D) a reduction in the fertility of research E) all of the above

D) a reduction in the fertility of research

30) Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that the capital stock is A) constant. B) growing at a rate of gA. C) growing at a rate of gN. D) growing at a rate of gA + gN. E) none of the above

D) growing at a rate of gA + gN.

34) Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that the output per worker ratio (K/N) is A) constant. B) growing at a rate of gA - gN. C) growing at a rate of gN. D) growing at a rate of gA. E) growing at a rate of δ + gA + gN.

D) growing at a rate of gA.

3) Patent protection is important in affecting technological progress because it makes research and development A) diffuse more quickly. B) more fertile. C) more easily available D) more appropriable E) none of the above

D) more appropriable

10) Refer to the information above. Which of the following represents the level of investment needed to maintain constant capital per effective worker (K/NA) in this economy? A) .02K B) .03K C) .05K D) .10K E) .15K

E) .15K

51) Refer to the information above. Which of the following represents the amount of investment per effective worker needed to maintain a constant level of capital per effective worker (K/NA)? A) .02(K/NA) B) .03(K/NA) C) .05(K/NA) D) .13(K/NA) E) .16(K/NA)

E) .16(K/NA)

7) Which of the following will cause an increase in output per effective worker? A) an increase in population growth B) an increase in the rate of depreciation C) a reduction in the saving rate D) an increase in the rate of technological progress E) an increase in the saving rate

E) an increase in the saving rate

35) Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that the capital per worker ratio (K/N) is A) constant. B) growing at a rate of gA - gN. C) growing at a rate of gN. D) growing at a rate of gA. E) growing at the same rate as Y/N.

E) growing at the same rate as Y/N.

23) The evidence shows that, over the last 25 years, spending on research and development in the rich countries has A) decreased dramatically. B) decreased slightly. C) remained constant. D) increased in absolute numbers, but decreased as a percentage of GDP. E) increased as a percentage of GDP.

E) increased as a percentage of GDP.