ECO 305 - Chapter 9 questions

their own, individual steady states.

Conditional convergence occurs when economies converge to: the same steady state as other economies. the Golden Rule steady state. the balanced-growth steady state. their own, individual steady states.

capital stock grows faster than does the labor force.

In a steady-state economy with population growth n and labor-augmenting technological progress g, persistent increases in standards of living are possible because the: capital stock grows faster than does the labor force. capital stock grows faster than does the number of effective workers. rate of depreciation constantly decreases. saving rate constantly increases.

a positive correlation between the quantity of factors and the efficiency of use.

Empirical investigations into whether differences in income per person are the result of differences in the quantities of the factors of production available or differences in the efficiency with which the factors are employed typically find: a negative correlation between the quantity of factors and the efficiency of use. a positive correlation between the quantity of factors and the efficiency of use. no correlation between the quantity of factors and the efficiency of use. large gaps between the quantity of factors accumulated and the efficiency of use.

greatly exceed

Empirical studies indicate that the rate of social return from positive "standing on others' shoulders" externalities of research ______ the negative "stepping on toes" externalities of research. greatly exceed approximately equal are substantially less than are only slightly less than

technological change.

Endogenous growth theory rejects the assumption of exogenous: production functions. rates of depreciation. population growth rates. technological change.

greater; more developed

English-style legal systems give ______ protections to shareholders and creditors than French Napoleonic Codes, typically resulting in ______ capital markets and faster rates of economic growth. greater; more developed greater; more corrupt less; more developed less; less corrupt

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

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 a lower level than in the steady state of the high capital economy. will be at a higher level than in the steady state of the high capital economy. will be at the same level as in the steady state of the high capital economy. will be proportional to the ratio of the capital stocks in the two economies.

0

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, output per effective worker grows at a ______ percent rate. 0 2 3 5

sf(k)/(δ + n + 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). s/((f(k))( δ + n + g)). f(k)/((s)( δ + n + g)). (s - f(k))/( δ + n + g).

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

In the Solow growth model with population growth and technological change, the break-even level of investment must cover: depreciating capital. depreciating capital and capital for new workers. depreciating capital and capital for new effective workers. depreciating capital, capital for new workers, and capital for new effective workers.

the rate of 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 population growth. the saving rate. the rate of technological progress. the rate of population growth plus the rate of technological progress.

assumed; explained

In the Solow growth model, technological change is ______, whereas in endogenous growth theories, technological change is ______. assumed; explained explained; assumed persistent; constant constant; persistent

g.

In the Solow model with technological progress, the steady-state growth rate of output per (actual) worker is: 0. g. n. n + g.

n + g.

In the Solow model with technological progress, the steady-state growth rate of total output is: 0. g. n. n + g.

capital does not exhibit diminishing returns.

In the basic endogenous growth model, income can grow forever—even without exogenous technological progress—because: the saving rate equals the rate of depreciation. the saving rate exceeds the rate of depreciation. capital does not exhibit diminishing returns. capital exhibits diminishing returns.

their own steady state.

International data suggest that economies of countries with different steady states will converge to: the same steady state. their own steady state. the Golden Rule steady state. steady states below the Golden Rule level.

protected property rights; were extractive and authoritarian

One explanation for greater economic development in moderate versus tropical climates is that institutions established by colonial settlers in moderate climates ______, while institutions established by colonists in tropical climates ______. were based on English common law; were based on the Napoleonic Code were based on the Napoleonic Code; were based on English common law protected property rights; were extractive and authoritarian were extractive and authoritarian; protected property rights

new product producers driving incumbent producers out of business.

Schumpeter's thesis of "creative destruction" is an explanation of economic progress resulting from: using up scarce natural resources to create new products. breaking down barriers to trade and development. new product producers driving incumbent producers out of business. creating new methods to destroy the environment.

output per worker, capital per worker, real wage

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 effective worker, capital per effective worker, real wage output per worker, capital per worker, real wage real rental price of capital, real wage, output per worker capital-output ratio, output per worker, capital per worker

knowledge.

The endogenous growth model's assumption of constant returns to capital is more plausible if capital is defined to include: plant and equipment. knowledge. depreciation. technology.

grow more rapidly

The preponderance of empirical evidence supports the hypothesis that economies that are open to trade _____ than comparable closed economies. grow more rapidly have lower steady-state levels of income per worker due to foreign competition have faster rates of population growth and technological progress converge more slowly to a steady-state equilibrium

the efficiency of labor.

The rate of labor-augmenting technological progress (g) is the growth rate of: labor. the efficiency of labor. capital. output.

significant determinants of the rate of economic growth in a country.

The type of legal system and the level of corruption in a country have been found to be: unrelated to the rate of economic growth in a country. significant determinants of the rate of economic growth in a country. important topics for political discussion, but not economic explanations of growth. important variables explaining the Golden Rule level of capital.

increasing the saving rate

Which of the following changes would bring the U.S. capital stock, currently below the Golden Rule level, closer to the steady-state, consumption-maximizing level? increasing the population growth rate increasing the rate of capital depreciation increasing the rate of technological progress increasing the saving rate