ECON Chapter-9

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

factor accumulation; production efficiency

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

g

In a steady-state economy with a saving rate s, population growth n, and labor-augmenting technological progress g, the formula for the steady-state ratio of capital per effective worker (k*), in terms of output per effective worker (f(k*)), is (denoting the depreciation rate by δ):

sf(k)/(δ + n + g).

When capital increases by ΔK units and labor increases by ΔL units, output (ΔY) increases by:

(MPK × ΔK) + (MPL × ΔL) units.

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 Y = F(K,(1 - u) EL) exhibits constant returns to scale, then output (Y) will double if:

K and E are doubled.

The number of effective workers takes into account the number of workers and the:

efficiency of each worker

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

0

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:

0.9 percent, 0.7 percent, and 1.4 percent, respectively.

In a Solow model with technological change, if population grows at a 2 percent rate and the efficiency of labor grows at a 3 percent rate, then in the steady state, total output grows at a ______ percent rate.

5

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:

5 percent.

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

level of income.

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

capital and labor.

Changes that can increase measured total factor productivity include:

increased expenditures on education.

With population growth at rate n and labor-augmenting technological progress at rate g, the Golden Rule steady state requires that the marginal product of capital (MPK):

net of depreciation be equal to n + g.

A possible externality associated with the process of accumulating new capital is that:

new production processes may be devised.

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

The rate of growth of labor productivity (Y/L) may be expressed as the rate of growth of total factor productivity:

plus the capital share multiplied by the rate of growth of the capital-labor ratio.

Endogenous growth theory rejects the assumption of exogenous:

technological change.

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

technological progress.

In the Solow growth model with population growth and technological change, the steady-state growth rate of income per person depends on:

the rate of technological progress.