Graded Homework - Chapter 9: Economic Growth II: Technology, Empirics, and Policy

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

0.

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.

Labor hoarding refers to:

continuing to employ workers during a recession to ensure they will be available in the recovery.

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 saving rate

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

new production processes may be devised.

Empirical results justify substantial government subsidies to research based on the finding that the:

the private return to research is less than the social return to research.

Changes that can increase measured total factor productivity include:

increased expenditures on education.

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.

If the U.S. production function is Cobb-Douglas with capital share 0.3, output growth is 3 percent per year, depreciation is 4 percent per year, and the capital-output ratio is 2.5, the saving rate that is consistent with steady-state growth is:

17.5 percent.

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.

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.

In the Solow growth model with population growth and technological change, the break-even level of investment must cover:

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

The preponderance of empirical evidence supports the hypothesis that economies that are open to trade _____ than comparable closed economies.

grow more rapidly

If the per-worker production function is y = Ak, where A is a positive constant, in the steady state, a:

higher saving rate leads to a higher growth rate.

Public policies in the United States designed to stimulate technological progress do not include:

tax breaks to encourage homeownership.

Endogenous growth theory rejects the assumption of exogenous:

technological change.

If two economies are identical (with the same population growth rates and rates of technological progress), but one economy has a lower saving rate, then the steady-state level of income per worker in the economy with the lower saving rate:

will be at a lower level than in the steady state of the high-saving 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 the same level as in the steady state of the high capital economy.