QUIZ 4

If the marginal product of capital net of depreciation equals 10 percent and the rate of population growth equals 2 percent, then this economy will be at the Golden Rule steady state if the rate of technological progress equals _____ percent.

8

In the Solow model with technological change, the Golden Rule level of capital is the steady state that maximizes:

consumption per effective worker.

The majority of empirical evidence supports the hypothesis that economies that are open to trade _____ than comparable closed economies.

grow more rapidly

In the two-sector endogenous growth model, the saving rate (s) affects the steady-state:

level of income.

The balanced growth property of the Solow growth model with population growth and technological progress predicts which of the following sets of variables will grow at the same rate in the steady state?

output per worker, capital per worker, real wage

Total factor productivity may be measured by:

subtracting the rate of growth of capital input, multiplied by capital's share of output, plus the rate of growth of labor input, multiplied by labor's share of output, from the rate of growth of output.

According to the Solow model, persistently rising living standards can only be explained by:

technological progress.

In the Solow model with technological progress, the steady-state growth rate of capital per effective worker is:

0

In the Solow model with technological progress, the steady-state growth rate of output per effective worker is:

0

The Solow residual measures the portion of output growth that cannot be explained by growth in:

capital and labor.

International differences in income per person in accounting terms must be attributed to differences in ______ and/or ______.

factor accumulation; production efficiency

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 _____.

the saving rate; the fraction of labor in universities

Conditional convergence occurs when economies converge to:

their own individual steady states.

If two economies are identical (including having the same saving rates, population growth rates, and efficiency of labor), but one economy has a smaller capital stock, then the steady-state level of income per worker in the economy with the smaller capital stock:

will be at the same level as in the steady state of the high capital economy.

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 ______.

zero; the rate of technological progress