Econ Ch. 9 Quiz

increasing the saving rate

Which of the following changes would bring the US capital stock , currently below the GR, closer to the SS maximizing level A) increasing pop, growth rate B) increasing rate of depreciation C) increasing saving rate D) increasing rate of tech progress

new production processes may be devised

A possible externality associated with the process of accumulating new capital is that A) a reduction in labor productivity may occur B) new production processes may be devised C) the gov. may need to adopt an industrial policy D) old capital may be more productive

.9 percent, .7 percent, 1.4 percent

Assume that an economy described by the Solow model is in a steady state with output and capital growing at 3 percent, and labor growing at 1 percent. The capital share is 0.3. The growth-accounting equation indicates that the contributions to growth of capital, labor, and total factor productivity are: A) 0.9 percent, 0.7 percent, and 1.4 percent, respectively. B) 1.8 percent, 0.3 percent, and 0.9 percent, respectively. C) 0.3 percent, 0.7 percent, and 2 percent, respectively. D) 0 percent, 1 percent, and 2 percent, respectively.

increased expenditures on education

Changes that can increase measured total factor productivity include: A) increases in the capital-labor ratio. B) regulations requiring increases in worker safety. C) regulations requiring reductions in pollution. D) increased expenditures on education

grow more rapidly

The preponderance of empirical evidence supports the hypothesis that economies that are open to trade -- than comparable closed economies A) have faster rates of pop. growth and tech progress B) have lower SS levels of income per worker due to foreign competition C) grow more rapidly D) converge more slowly to a SS equilibrium

the private return to research is less than the social return to research

Empirical results justify substantial government subsidies to research based on the finding that the: A) the private return to research is greater than the social return to research. B) the private return to research is less than the social return to research. C) the private return to research is approximately equal to the social return to research. D) the private return to research is positive, but the social return to research is negative

tech change

Endogenous growth theory rejects the assumption of exogenous A) production functions B) rates of depreciation C) tech change D) pop, growth rates

will be at a lower level than in the SS of high saving economy

If 2 economies are identical (w same pop growth rates and rates of tech progress) but one economy has a lower saving rate, then the SS level of income per worker in the economy with the lower saving rate A) will be at the same level as in the steady state of the high saving economy B) will be at a higher level than in the steady state of the high saving economy C) will grow at a slower rate than in the high saving economy D) will be at a lower level than in the SS of the high saving economy

K and E are doubled

If Y is output, K is capital, u is the fraction of the labor force in universities, L is labor and E is the stock of knowledge, and the production function Y = F(K, (1-u) EL) exhibits constant returns to scale, then Y will double if A) K and E are doubled B) L is doubled C) K is doubled D) K and u is doubled

17.5 percent

If the U.S. production function is Cobb-Douglas with capital share 0.3, output growth is 3 percent per year, depreciation is 4 percent per year, and the capital-output ratio is 2.5, the saving rate that is consistent with steady-state growth is: A) 20 percent. B) 17.5 percent. C) 12.5 percent. D) 14 percent

5 percent

If the labor force is growing at a 3 percent rate and the efficiency of a unit of labor is growing at a 2 percent rate, then the number of effective workers is growing at a rate of A) 6 percent B) 2 percent C) 5 percent D) 3 percent

higher saving rate leads to higher growth rate

If the per-worker production function is y = Ak, where A is a positive constant, in the steady state, a: A) higher saving rate does not affect the growth rate. B) lower saving rate leads to a higher growth rate. C) higher saving rate leads to a higher growth rate. D) lower saving rate does not affect the growth rate

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

If two economies are identical (same saving rate, pop growth, efficiency of labor), but one economy has a smaller capital stock, then the SS level of income per worker in the economy with the smaller capital stock !) will be a t a lower level than in the SS of the high capital economy B) will be at a higher level than in the SS of the high capital economy C) will be at the same level as in the steady state of the high capital economy D) will be proportional to the ratio of the capital stocks in the 2 countries

capital stock grows faster than does labor force

In a SS economy with population growth n and labor augmenting tech progress g, persistent increases in standards of living are possible because the A) capital stock grows faster than does the # of effective workers B) capital stock grows faster than does the labor force C) saving rate constantly increases D) rate of depreciation constantly decreases

depreciating capital, capital for new workers, and capital for new effective workers

In the Solow growth model with population growth and tech change, the break even level of investment must cover A) depreciating capital B) depreciating capital and capital for new workers C) depreciating capital, capital for new workers, and capital for new effective workers D) depreciating capital and capital for new effective workers

continuing to employ workers during a recession to ensure they will be avail in recovery

Labor hoarding refers to: A) using less capital in production so that more workers will have jobs. B) continuing to employ workers during a recession to ensure they will be available in the recovery. C) keeping workers in low-wage jobs in order to reduce labor costs. D) contractually preventing workers from obtaining jobs with competing firms

tax breaks to encourage home ownership

Public policies in the US designed to stimulate tech progress do not include A) subsidies given by the NAtional Science Found B) temporary monopoly granted by the patent system C) tax breaks to encourage homeownership D) tax breaks for research and development

0

in the solow model with tech progress, the SS growth rate of output per effective worker is A) n B) n + g C) g D) 0