ECO 3203 Test 3 Prep ~ Ch 7 focused

Look at 34 on chapter 7 sheet

look at chapter 7 sheet

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

C) consumption per worker.

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

D) it is constant

9) Before the Industrial Revolution, standards of living differed

D) little over time and across countries.

40) One plausible explanation of the U.S. productivity slowdown starting in 1973 is that it was a result of the increase in the relative price of energy. This explanation would require that, in light of higher energy costs, the

A) capital stock is overestimated.

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

A) increases output per worker and increases capital per worker.

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

A) marginal product of capital.

53) In the Solow growth model, an increase in the savings rate

A) raises steady state per capita output.

38) Growth in the Solow residual was fastest in the

B) 1960s.

5) 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

B) Thomas Malthus.

14) The Malthusian model emphasizes fixity in which of the following factors of production?

B) land

35) All of the following increase total factor productivity except

B) more capital.

12) In the Malthusian model, the population growth rate is

B) positively related to consumption per worker.

17) Why do we analyze the steady state in the Malthusian model?

D) Because the long run equilibrium of the model is the steady state.

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

D) Total saving is steady.

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

D) both the capital stock and the labor force.

62) In the steady state of Solow's exogenous growth model, an increase in the growth rate of labor force

D) decreases output per worker and decreases capital per worker.

4) In an exogenous growth model, growth is caused by

D) forces that are not explained by the model itself.

3) When we compare poor and rich countries in the world

A) There is much greater dispersion in growth rates in per capita income for the poor countries than for the rich countries.

50) In the steady state of the Solow growth model

C) aggregate consumption grows at a constant rate.

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

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

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

C) no change in the standard of living.

21) In a Malthusian world, why is misery recurrent?

D) Mortality depends on the standard of living.

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

A) the marginal return of capital is decreasing.

6) In the Malthusian model of economic growth

A) Per capita consumption affects birth rates and death rates.

23) In a Malthusian world, what would improve the standard of living temporarily?

A) a war

26) If an epidemic hits a Malthusian economy, the immediate consequence is

A) an increase in the standard of living.

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

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

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

A) higher population growth.

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

A) increases output per worker and increases capital per worker.

49) 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

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

44) The per-worker production function relates output per worker

A) to capital per worker.

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

B) an increase in violent crime

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

B) decrease death rates and also decrease birth rates.

25) In the Malthusian model, improvements in health care lead to

B) higher population and lower per-capita production.

31) Malthus was too pessimistic because he did not foresee the effects of

B) increases in the capital stock and the effects of such increases on production.

48) It is useful to study the Solow growth model because

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

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

B) population growth rate plus the depreciation rate.

10) Recent evidence suggests that output per worker is

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

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

B) the declining marginal product of capital.

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

B) the direct contribution of labor and capital.

11) There is evidence that income per worker is converging in

B) the richest countries, but not the poorest countries.

37) Growth in the Solow residual was slowest in the

C) 1970s.

2) On average, for the last 100 years or more, real GDP per capita in the United States has increased by

C) 2% per year.

1) 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.

C) 2.7

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

C) A savings rate that increases as income increases.

7) The Malthusian model performs poorly in explaining economic growth after the

C) Industrial Revolution.

16) A steady state is

C) a long-run equilibrium.

29) In a Malthusian world, what events would improve permanently the standard of living, as measured by output per capita?

C) a new mutation of germs

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

C) birth control

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

C) capital

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

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

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

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

39) One plausible explanation of the U.S. productivity slowdown starting in 1973 is that it is an artifact of mismeasurement. This explanation would require that production of

C) services is underestimated.

13) In the Malthusian model, population growth is endogenous because

C) the birth and death rates are endogenous.

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

C) the constant returns to scale.

47) In the Solow growth model, the law of motion of capital takes into account

C) the depreciation of old capital.

64) With an increase in total factor productivity in the Solow growth model,

C) the economy reaches a steady state with higher output.

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

D) A constant marginal product of capital.

36) Which of the following increases total factor productivity?

D) new production procedures

20) The Malthusian model predicts that

D) population control improves the standard of living.

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

D) the production function has constant returns to scale.

41) The period from 2000 to 2010

D) was a period of low productivity growth, almost as bad as the period 1970-1980.

42) One plausible explanation of the U.S. productivity slowdown starting in 1973 is that it was the result of the time needed to adapt to new technology. This explanation would require that

D) workers time at their jobs be diverted from production to learning the technology.