Econ 359 Midterm 2

Countries in which a relatively small fraction of output is channeled into investment tend to have a

relatively low standard of living

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

the deprecation of old capital

The per worker production function relates output per worker

to capital per worker

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

decrease death rates and also decrease birth rates

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

increass output per worker and increase capital per worker

Total factor productivity can be influenced by

new inventions

The idea that an improvement in technology causes an increase in population but cause no increase in the average standard of living is attributed to

Thomas Malthus

Before the industrial revolution, standards of living differed

little over time and across countries

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

marginal product of capital

the golden rule savings rate is achieved when capital is accumulated at a rate that

maximizes consumption per worker in the steady state

Rates of growth of real per capita income are most alike amongst

the richest countries but not the poorest countries

If changed 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

2.7

The Solow model emphasizes the role of which of the following factors of production

capital

The Golden Rule Quantity of capital per worker maximizes the steady state level of

consumption per worker

Growth in the real GDP per capita in Canada is roughly consistent with which of the following predictions of the Solow model?

exogenous TFP growth at a constant rate

In an endogenous growth model, growth is caused by

forces determined by the model

In an exogenous growth model, growth is caused by

forces that are bit explained by the model itself

In the Solow growth model

higher population growth implies a lower standard of living

A pessimistic long run Malthusian result is

improvements in technology does not improve standards of living

The Malthusian model had the property that

improvements in technology for producing goods leads to increased population growth

Recent evidence suggests that the level of output per worker is

not correlated with the growth rate in output per worker

The per worker production function describes the relationship between

output per worker and land per worker

In the Malthusian model, the population growth rate is

positively related to consumption per worker

Recent evidence suggests that output per worker is

positively related to the rate of investment and negatively related to the rate of population growth

The Solow model suggest that, to improve a country's standard of living in the long run

production technology must become more efficient

The Solow growth model predicts that a country's standard of living can continue to increase in the long run only if

there is sustained increaes in total factor productivity

An increase in savings can be brought about

through government policy

In the Malthusian model, population growth depends on

consumption per worker

The Malthusian model performs poorly in explaining economic growth after the

Industrial Revolution

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

the declining marginal product of capital