Econ 304 final exam

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In the 1948-2012 data, the unemployment rate was highest in

1982

Growth accounting, popularized by Robert Solow, attempts to attribute a change in aggregate output

separately between changes in total factor productivity and changes in the supplies of factors of production.

An important feature of the two-sided search model is that

would-be workers care not just about the market wage, but about the chances of finding work.

The participation rate is

procyclical.

In the one-sided search model, an increase in the separation rate

reduces the welfare of an employed worker.

In the one-sided search model, a decrease in the fraction of the unemployed receiving job offers

reduces the welfare of the unemployed.

There is evidence that income per worker is converging in

the richest countries, but not the poorest countries.

Government intervention influences the unemployment rate through

unemployment insurance.

A key determinant of the unemployment rate is

aggregate economic activity.

In a Malthusian world, what event would improve temporarily the standard of living, as measured by output per capita?

an increase in violent crime

In a Malthusian world, what would improve the standard of living permanently?

birth control

A decrease in matching efficiency

can explain the shift in the Beveridge curve.

The Golden Rule of capital accumulation maximizes the steady-state level of

consumption per worker.

The unemployment rate is

countercyclical

In more modern times as opposed to the times of Malthus, higher standards of living appear to

decrease death rates and also decrease birth rates.

In the Malthusian model, state-mandated population control policies are likely to

decrease the equilibrium size of the population and increase the equilibrium level of consumption per worker.

The matching function exhibits all of the following properties except

diminishing marginal product of labor.

In an exogenous growth model, growth is caused by

forces that are not explained by the model itself.

In the steady state of Solow's exogenous growth model, an increase in the savings rate

increases output per worker and increases capital per worker.

In the steady state of Solow's exogenous growth model, an increase in total factor productivity

increases output per worker and increases capital per worker.

In the two-sided search model, a decrease in matching efficiency

increases the size of the labor force.

In the two-sided search model, a decrease in productivity

increases the unemployment rate.

In the one-sided search model, the welfare of an unemployed worker

increases with the size of the employment insurance benefit.

In the one-sided search model, the welfare of an employed worker

is a concave function of the real wage.

The reservation wage

is the wage at which an unemployed worker is just indifferent to accepting a job and turning it down.

The matching function captures the difficulties in

matching heterogeneous firms with heterogenous workers.

If the savings rate falls in the Solow growth model

per worker output falls in the steady state.

In the Golden Rule steady state, the marginal product of capital is equal to the

population growth rate plus the depreciation rate.

In the Malthusian model, the population growth rate is

positively related to consumption per worker.

If N is the working-age population, Q is the labor force, and U is the number of unemployed, then the unemployment rate is measured as

U/Q

In the one-sided search model, if the employment insurance benefit goes down,

the reservation wage goes down and long-run unemployment goes down.

In the one-sided search model, if the job offer rate goes down,

the reservation wage goes down and the effect on long-run unemployment is ambiguous.

The Solow growth model can account for

why richer countries have higher investment rates.

In a Malthusian world, why is misery recurrent?

Mortality depends on the standard of living.

The idea that an improvement in technology causes an increase in population but causes no increase in the average standard of living is attributed to

Thomas Malthus.

A steady state is

a long-run equilibrium.

Sectoral shifts influences the unemployment rate through

a shift away from manufacturing industries and toward services industries.

The biggest contribution to real U.S. GDP growth in the 1970s was due to growth in

both the capital stock and the labor force.

The Solow model emphasizes the role of which of the following factors of production?

capital

In the two-sided search model, an increase in productivity does not

increase the size of the labor force.

In the two-sided search model, an increase in the unemployment insurance benefit does not, under any circumstances

increase the vacancy rate.

Which of the following best describes mismatch that can increase the unemployment rate?

a decrease in the availability of information for firms about the skills of workers

In the Malthusian model, improvements in health care lead to

higher population and lower per-capita production.

If an epidemic hits a Malthusian economy, the long-term consequence is

no change in the standard of living.

Recent evidence suggests that output per worker is

positively related to the rate of investment and negatively related to the rate of population growth.

From 2009 to 2012

The Beveridge curve shifted to the right.

We can use a per-worker production function in the Malthusian model because

the production function has constant returns to scale.

If N is the working-age population, Q is the labor force, and U is the number of unemployed, then the employment/population ratio is measured as

(Q-U)/N

In the two-sided search model,

- Each consumer decides between searching for work and home production. - the wage is determined by bargaining between the firm and the worker. -the firm's surplus from a match is equal to a constant fraction of total surplus. - There are N consumers, Q is the labor force, and N-Q is the number of consumers choosing home production. - Each consumer decides between searching for work and home production. - Firms decide whether or not to enter the labor market by posting vacancies. - are N total consumers

The average unemployment rate was lowest during what period?

1950-1970

Growth in the Solow residual was fastest in the

1960s.

Since 1900, real GDP per capita in the United States has increased by

2% per year.

If A is the number of job vacancies in the aggregate, Q is the labor force, and U is the number of unemployed, then the vacancy rate is measured by

A/(A+Q-U)

In Solow's exogenous growth model, the steady-state growth rate of capital can be increased by

higher population growth.

In the Malthusian model, an improvement in the technology of growing food is likely to

increase the equilibrium size of the population and have no effect on the equilibrium level of consumption per worker.

In the two-sided search model, a decrease in the unemployment insurance benefit

reduces the unemployment rate.

In Solow's model of economic growth, suppose that s represents the savings rate, z represents total factor productivity, k represents the level of capital per worker, and f(k) represents the per-worker production function. Also suppose that n represents the population growth rate and d represents the depreciation rate of capital. The equilibrium level of capital per worker, k*, will satisfy the equation

szf(k*) = (n + d)k*

In the Solow growth model, long run growth in the standard of living is propelled by

technological change.

In the Malthusian model, population growth is endogenous because

the birth and death rates are endogenous.

We can express the per-worker production function as a function of only per-worker capital thanks to

the constant returns to scale.

In Solow's exogenous growth model, the principal obstacle to continuous growth in output per capita is due to

the declining marginal product of capital.

In the two-sided search model

the firm's surplus from a match is equal to a constant fraction of total surplus.

In Solow's exogenous growth model, the economy reaches a stable steady state because

the marginal return of capital is decreasing.

Labour market tightness in the two-sided search model is defined by

the number of firms divided by the number of consumers searching for work.

The participation rate was higher in 2012 than in 1948 because

the participation rate of women rose between 1948 to 2012.

In the one-sided search model, if the employment insurance benefit goes down,

the reservation wage goes up.

If changes in economic policy could cause the growth rate of real GDP to increase by 1% per year for 100 years, then GDP would be ________ % higher after 100 years than it would have been otherwise.

2.7

Percentage deviations from trend in unemployment are

countercyclical and have been smaller than the percentage deviations from trend in real GDP.

In the two-sided search model, the number of firms is

endogenous.

In the Malthusian model of economic growth, an increase in the quantity of land

has no effect on steady state per capita consumption, and increases the steady state population.

In the one-sided search model, if an unemployed worker turns down a job offer,

he or she continues to search.

The saving rate has the following characteristic in Solow's exogenous growth model

it is constant.

The matching function captures the idea that

it is costly and time-consuming to get firms and workers together to produce output.

It is useful to study the Solow growth model because

it is useful in understanding the sources of economic growth after 1800.

The slope of the output per worker function is equal to the

marginal product of capital.

All of the following increase total factor productivity except

more capital.

The employment/population ratio is

more volatile than the participation rate.

Which of the following increases total factor productivity?

new production procedures

Which of the following, if implemented in the Solow growth model, would not lead to a steady state?

A constant marginal product of capital.

Which of the following is not a feature of the steady state in Solow's exogenous growth model?

Total saving is steady.

Malthus was wrong in what sense?

He did not predict the high rates of future growth in standards of living.

The Malthusian model performs poorly in explaining economic growth after the

Industrial Revolution.

If N is the working-age population, Q is the labor force, and U is the number of unemployed, then the participation rate is measured as

Q/N

The negative correlation between the vacancy rate and the unemployment rate is called

The Beveridge curve.

The Solow residual attempts to measure the amount of output not explained by

The direct contribution of labor and capital.


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