ECON 102 QUIZ 10

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The Solow model explains the "miracle" of Japanese and German growth because (choose two) A at the lower capital stock, more capital is added by investment than is removed by depreciation B at the lower capital stock, less capital is added by investment than is removed by depreciation C their saving rates were higher than in the United States D their saving rates were lower than in the United States

A at the lower capital stock, more capital is added by investment than is removed by depreciation C their saving rates were higher than in the United States

The analysis in Chapter 8 introduces the role of (choose one or more) A population growth B saving C technological progress

A population growth B saving

If saving is reduced when starting with more capital than in the Golden Rule steady state, (choose one or more) A the capital stock falls B consumption immediately falls C output immediately falls D investment immediately falls

A the capital stock falls C output immediately falls D investment immediately falls

If saving is increased when starting with less capital than in the Golden Rule steady state, (choose one or more) A the capital stock rises B consumption immediately rises C output immediately rises D investment immediately rises

A the capital stock rises C output immediately rises D investment immediately rises

Our model suggests that a decrease in the saving rate would cause (choose one or more) A the capital stock to fall B the economy to reach an equilibrium characterized by a lower steady-state level of capital per worker C the economy to reach an equilibrium characterized by lower output per worker

A the capital stock to fall B the economy to reach an equilibrium characterized by a lower steady-state level of capital per worker C the economy to reach an equilibrium characterized by lower output per worker

Our model suggests that an increase in the saving rate would cause (choose one or more) A the capital stock to rise B the economy to reach an equilibrium characterized by a higher steady-state level of capital per worker C the economy to reach an equilibrium characterized by higher output per worker

A the capital stock to rise B the economy to reach an equilibrium characterized by a higher steady-state level of capital per worker C the economy to reach an equilibrium characterized by higher output per worker

To compare the standard of living between two countries, economists might convert a measure of income per person at (choose one or more) A the market exchange rate between the two currencies B the official exchange rate between the two countries C purchasing-power parity

A the market exchange rate between the two currencies B the official exchange rate between the two countries C purchasing-power parity

The steady-state level of capital per worker is (choose two) A above the level of capital stock at which depreciation exceeds investment B above the level of capital stock at which investment exceeds depreciation C below the level of capital stock at which depreciation exceeds investment D below the level of capital stock at which investment exceeds depreciation

B above the level of capital stock at which investment exceeds depreciation C below the level of capital stock at which depreciation exceeds investment

Mankiw contrasts the perspective of Thomas Robert Malthus (1766-1834) with that of Michael Kremer (1964- ). Who is the optimist and who is the pessimist? A Kremer is the optimist and Malthus is the pessimist. B Malthus is the optimist and Kremer is the pessimist.

Kremer is the optimist and Malthus is the pessimist.

The production function exhibits A a constant marginal product of capital B a diminishing marginal product of capital C an increasing marginal product of capital

a diminishing marginal product of capita

Population growth can explain A a sustained growth in the standard of living B a sustained growth in total output C both A and B

a sustained growth in total outpu

The analysis in Chapter 8 assumes that the population grows A faster than the labor force B slower than the labor force C at the same rate as the labor force

at the same rate as the labor force

At the Golden Rule level of capital, A the marginal product of capital per worker equals the depreciation rate B the marginal product of capital per worker net of depreciation equals zero C both A and B

both A and B

Break-even investment is defined as the amount of investment necessary to keep the capital stock per worker constant, and includes A the depreciation of existing capital B the amount of investment necessary to provide new workers with capital C both A and B

both A and B

Michael Kremer observes that A over the broad span of history, world growth rates have increased together with world population B the more populous regions of the world have experienced more rapid growth C both A and B

both A and B

Population growth can help explain A why some countries are rich and others are poor B affects our criterion for determining the Golden Rule level of capital C both A and B

both A and B

The capital stock can change over time because of A investment B depreciation C both A and B

both A and B

With a growing population, the Golden Rule level of capital implies that A the marginal product of capital equals the depreciation rate plus the rate of population growth B the marginal product of capital minus the depreciation rate equals the rate of population growth C both A and B

both A and B

If the capital stock is ABOVE the Golden Rule level, an increase in the capital stock would A cause consumption to fall B cause consumption to rise

cause consumption to fall

If the capital stock is BELOW the Golden Rule level, an increase in the capital stock would A cause consumption to fall B cause consumption to rise

cause consumption to rise

The Solow growth model assumes that the production function has A constant returns to scale B decreasing returns to scale C increasing returns to scale

constant returns to scale

Constant returns to scale implies that the number of workers A affects the relationship between output per worker and capital per worker B does not affect the relationship between output per worker and capital per worker

does not affect the relationship between output per worker and capital per worker

To measure economic growth, economists normally use data on A gross domestic product (GDP) B gross national product (GNP)

gross domestic product (GDP)

The analysis in Questions 10-13 concerns A growth effects B level effects C both A and B

level effects

Steady-state consumption per worker is steady-state output per worker A minus steady-state depreciation per worker B plus steady-state depreciation per worker

minus steady-state depreciation per worker

In Figure 8-13, Mankiw uses data from about 100 countries to illustrate a striking A negative correlation between the level of income per person in 2010 and the average annual population growth rate for the period 1961-2010 B positive correlation between the level of income per person in 2010 and the average annual population growth rate for the period 1961-2010

negative correlation between the level of income per person in 2010 and the average annual population growth rate for the period 1961-2010 B positive c

n Figure 8-6, Mankiw uses data from 96 countries to illustrate a striking correlation between the level of income per person in 2010 and investment as a percentage of output averaged for the period 1960-2010. This correlation is A negative B positive

positive

f the capital stock is ABOVE the Golden Rule level, an increase in the capital stock would A raise output less than depreciation B raise output more than depreciation

raise output less than depreciation

if the capital stock is BELOW the Golden Rule level, an increase in the capital stock would A raise output less than depreciation B raise output more than depreciation

raise output more than depreciation

To measure changes in the standard of living over time, economists normally use data on A nominal income per person B real income per person

real income per person

If capital per worker were ABOVE the Golden Rule level of capital, and the saving rate were lowered, steady-state consumption would A fall B rise

rise

If capital per worker were BELOW the Golden Rule level of capital, and the saving rate were raised, steady-state consumption would A fall B rise

rise


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