Econ 220

Money serves as​ ________.

all of the above

If productivity growth equals 3.0​ percent, the contribution from capital growth 1.2 percent and the contribution from labor growth 2.0​ percent, then output growth must equal​ ________.

6.2 percent.

In a steadyminus−state economy with no population​ growth, output per worker is​ 35, the saving rate is 20​ percent, and the depreciation rate is 11 percent. The level of capital per worker is​ ________.

64

How does an increase in total factor productivity affect output per​ worker?

All of the above.

What has been the main cause of hyperinflation​ episodes?

Rapid growth of the money supply

Which of the following is not one of the three factors that determine an​ economy's growth rate in the Romer​ model?

The saving rate

In the Romer​ model, how does an increase in the fraction of the population engaged in​ R&D, alphaα​, affect the growth rate of​ per-capita output over​ time?

When more resources are devoted to research and​ development, the level of​ per-capita output at first​ falls, but the growth rate of​ per-capita output will rise permanently.

First, click the table icon to view data of average money growth rates and average inflation​ rates, for select​ countires, for the period​ 1991-2000. Inflation is measured using the CPI and the monetary aggregate considered is M1. Does this data support the quantity theory of​ money?

Yes because money growth and inflation rates are positively correlated.

During the late 1960s Chinese authorities imposed the precepts of the​ "Cultural Revolution" on their people. As a result almost all scholars and researchers were sent to the fields to perform manual agricultural tasks. According to the Romer​ model, the​ "Cultural Revolution" in China created

a decrease in alphaa decrease in α ​, resulting in a decrease in the growth rate of output per workera decrease in the growth rate of output per worker .

Based on the Solow​ model's conclusions about population​ growth, the effects of additional immigration​ (ceteris paribus) will cause a​ country's

aggregate output level to increase while decreasing the​ country's capital-labor ratio.

An increase in the saving rate in a​ steady-state economy would cause

an upward shift in the​ saving-per-worker curve and an increase in the​ capital-labor ratio.

Which of these transactions results in an increase in​ M1?

certificate of deposit​ matures, adding​ $520 to your checking account

With high inflation​ ________.

creditors are always worse off than debtors

When the Fed buys government securities in the open​ market, the money supply​ ________ because​ ________.

​increases; banks gain​ liquidity, they make more loans and checking account deposits increase

Why may private​ R&D expenditures be too​ low?

Because technology is​ nonexcludable, it is hard to keep unauthorized users from using​ it, reducing the potential benefits that can be made from producing it.

According to Figure​ 5.1, the real interest rate is relatively high in​ ________.

Brazil

Using the graphic representation of the Solow growth​ model, what happens to output per worker and the​ capital-labor ratio when there is an increase in the technology factor ​(A​)?

C and D only.

Assume that the output per worker production function​ is: y Subscript t Baseline equals 2 k Subscript t Superscript 0.5 The saving and depreciation rates are estimated at 0.2 and 0.04​, respectively.

Calculate the steady state​ capital-labor ratio for this economy. 100aces.) Calculate the steady state consumption per worker for this economy. 16. ​(Round your response to three decimal​ places.)

What shortcoming of the Solow growth model does the Romer model attempt to​ remedy?

In the Solow​ model, output per person eventually reaches a steady state​, from which it grows no further.

What is​ hyperinflation?

Periods of extremely rapid price increases of more than 50 percent per month

How does population growth affect the steady state levels of capital and output per​ worker?

Population growth causes the steady state level of capital to decrease and the steady state level of output per worker to decrease.

As an input to​ production, how does technology differ from labor and capital​ inputs?

Technological ideas are nonrivalrous inputs and they often have a low level of​ excludability, whereas capital and labor are fundamentally excludable rival inputs.

Suppose total population is 120 million and 25​% is devoted to the production of research and development. Using the simplified version of the Romer model outlined in the​ chapter, calculate the following if chiχ ​= 0.0007 and Upper A Subscript tAt ​= 25.

The change in technology ​(Upper Delta Upper A Subscript tΔAt​) ​= 0.53. ​(Round your response to two decimal​ places.) The growth rate of technology is 2.10%. ​(Round your response to two decimal​ places.) The​ per-worker growth rate of output is 3.00​%. ​(Round your response to two decimal​ places.)

Figure 5.1 provides support for the Fisher​ effect, by​ ________.

displaying a positive relationship between the inflation rate and the nominal interest rate

The Solow model suggests that economies with the same aggregate production​ function, ratio of workers to the total population and saving rates will​ ________.

experience convergence.

The Romer model is distinct from the Solow model in that the former assumes​ that________.

some labor is devoted to producing new technology.

The real interest rate​ ________ inflation​ ________.

subtracted from the nominal rate yields​ expected; according to the Fisher equation

Open Market operations consist mainly of​ ________.

the Fed buying and selling government securities in the open market

The goal of endogenous growth theory is to​ explain________.

the causes of technological advance.

​Steady-state investment per worker is positively related to the​ capital-labor ratio because the higher the​ capital-labor ratio

the more investment per worker is required to replace depreciating capital.

If output per worker in a steady state is​ $30,000, depreciation is​ 13%, the population growth rate is two​ percent, and the saving rate is​ 20%, what is the steady state capital

​$40,000

Suppose that the economy of India can be represented by the following production​ function: Upper Y equals AK Superscript 1 divided by 3 Baseline Upper L Superscript 2 divided by 3Y=AK1/3L2/3 During 2009​ India's technological growth​ (Solow residual) was 44​%. The growth rates of the capital and labor input stocks were 55​% in both cases.

​India's output growth rate for 2009 was 99​%. ​(Enter your response as a whole​ number.) The contribution of productivity growth to total output growth​ (in percentage​ terms) was 44​%. ​ (Enter your response as a whole​ number.)