Econ 304 final exam
In the 1948-2012 data, the unemployment rate was highest in
1982
Growth accounting, popularized by Robert Solow, attempts to attribute a change in aggregate output
separately between changes in total factor productivity and changes in the supplies of factors of production.
An important feature of the two-sided search model is that
would-be workers care not just about the market wage, but about the chances of finding work.
The participation rate is
procyclical.
In the one-sided search model, an increase in the separation rate
reduces the welfare of an employed worker.
In the one-sided search model, a decrease in the fraction of the unemployed receiving job offers
reduces the welfare of the unemployed.
There is evidence that income per worker is converging in
the richest countries, but not the poorest countries.
Government intervention influences the unemployment rate through
unemployment insurance.
A key determinant of the unemployment rate is
aggregate economic activity.
In a Malthusian world, what event would improve temporarily the standard of living, as measured by output per capita?
an increase in violent crime
In a Malthusian world, what would improve the standard of living permanently?
birth control
A decrease in matching efficiency
can explain the shift in the Beveridge curve.
The Golden Rule of capital accumulation maximizes the steady-state level of
consumption per worker.
The unemployment rate is
countercyclical
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 Malthusian model, state-mandated population control policies are likely to
decrease the equilibrium size of the population and increase the equilibrium level of consumption per worker.
The matching function exhibits all of the following properties except
diminishing marginal product of labor.
In an exogenous growth model, growth is caused by
forces that are not explained by the model itself.
In the steady state of Solow's exogenous growth model, an increase in the savings rate
increases output per worker and increases capital per worker.
In the steady state of Solow's exogenous growth model, an increase in total factor productivity
increases output per worker and increases capital per worker.
In the two-sided search model, a decrease in matching efficiency
increases the size of the labor force.
In the two-sided search model, a decrease in productivity
increases the unemployment rate.
In the one-sided search model, the welfare of an unemployed worker
increases with the size of the employment insurance benefit.
In the one-sided search model, the welfare of an employed worker
is a concave function of the real wage.
The reservation wage
is the wage at which an unemployed worker is just indifferent to accepting a job and turning it down.
The matching function captures the difficulties in
matching heterogeneous firms with heterogenous workers.
If the savings rate falls in the Solow growth model
per worker output falls in the steady state.
In the Golden Rule steady state, the marginal product of capital is equal to the
population growth rate plus the depreciation rate.
In the Malthusian model, the population growth rate is
positively related to consumption per worker.
If N is the working-age population, Q is the labor force, and U is the number of unemployed, then the unemployment rate is measured as
U/Q
In the one-sided search model, if the employment insurance benefit goes down,
the reservation wage goes down and long-run unemployment goes down.
In the one-sided search model, if the job offer rate goes down,
the reservation wage goes down and the effect on long-run unemployment is ambiguous.
The Solow growth model can account for
why richer countries have higher investment rates.
In a Malthusian world, why is misery recurrent?
Mortality depends on the standard of living.
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
Thomas Malthus.
A steady state is
a long-run equilibrium.
Sectoral shifts influences the unemployment rate through
a shift away from manufacturing industries and toward services industries.
The biggest contribution to real U.S. GDP growth in the 1970s was due to growth in
both the capital stock and the labor force.
The Solow model emphasizes the role of which of the following factors of production?
capital
In the two-sided search model, an increase in productivity does not
increase the size of the labor force.
In the two-sided search model, an increase in the unemployment insurance benefit does not, under any circumstances
increase the vacancy rate.
Which of the following best describes mismatch that can increase the unemployment rate?
a decrease in the availability of information for firms about the skills of workers
In the Malthusian model, improvements in health care lead to
higher population and lower per-capita production.
If an epidemic hits a Malthusian economy, the long-term consequence is
no change in the standard of living.
Recent evidence suggests that output per worker is
positively related to the rate of investment and negatively related to the rate of population growth.
From 2009 to 2012
The Beveridge curve shifted to the right.
We can use a per-worker production function in the Malthusian model because
the production function has constant returns to scale.
If N is the working-age population, Q is the labor force, and U is the number of unemployed, then the employment/population ratio is measured as
(Q-U)/N
In the two-sided search model,
- Each consumer decides between searching for work and home production. - the wage is determined by bargaining between the firm and the worker. -the firm's surplus from a match is equal to a constant fraction of total surplus. - There are N consumers, Q is the labor force, and N-Q is the number of consumers choosing home production. - Each consumer decides between searching for work and home production. - Firms decide whether or not to enter the labor market by posting vacancies. - are N total consumers
The average unemployment rate was lowest during what period?
1950-1970
Growth in the Solow residual was fastest in the
1960s.
Since 1900, real GDP per capita in the United States has increased by
2% per year.
If A is the number of job vacancies in the aggregate, Q is the labor force, and U is the number of unemployed, then the vacancy rate is measured by
A/(A+Q-U)
In Solow's exogenous growth model, the steady-state growth rate of capital can be increased by
higher population growth.
In the Malthusian model, an improvement in the technology of growing food is likely to
increase the equilibrium size of the population and have no effect on the equilibrium level of consumption per worker.
In the two-sided search model, a decrease in the unemployment insurance benefit
reduces the unemployment rate.
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
szf(k*) = (n + d)k*
In the Solow growth model, long run growth in the standard of living is propelled by
technological change.
In the Malthusian model, population growth is endogenous because
the birth and death rates are endogenous.
We can express the per-worker production function as a function of only per-worker capital thanks to
the constant returns to scale.
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.
In the two-sided search model
the firm's surplus from a match is equal to a constant fraction of total surplus.
In Solow's exogenous growth model, the economy reaches a stable steady state because
the marginal return of capital is decreasing.
Labour market tightness in the two-sided search model is defined by
the number of firms divided by the number of consumers searching for work.
The participation rate was higher in 2012 than in 1948 because
the participation rate of women rose between 1948 to 2012.
In the one-sided search model, if the employment insurance benefit goes down,
the reservation wage goes up.
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.
2.7
Percentage deviations from trend in unemployment are
countercyclical and have been smaller than the percentage deviations from trend in real GDP.
In the two-sided search model, the number of firms is
endogenous.
In the Malthusian model of economic growth, an increase in the quantity of land
has no effect on steady state per capita consumption, and increases the steady state population.
In the one-sided search model, if an unemployed worker turns down a job offer,
he or she continues to search.
The saving rate has the following characteristic in Solow's exogenous growth model
it is constant.
The matching function captures the idea that
it is costly and time-consuming to get firms and workers together to produce output.
It is useful to study the Solow growth model because
it is useful in understanding the sources of economic growth after 1800.
The slope of the output per worker function is equal to the
marginal product of capital.
All of the following increase total factor productivity except
more capital.
The employment/population ratio is
more volatile than the participation rate.
Which of the following increases total factor productivity?
new production procedures
Which of the following, if implemented in the Solow growth model, would not lead to a steady state?
A constant marginal product of capital.
Which of the following is not a feature of the steady state in Solow's exogenous growth model?
Total saving is steady.
Malthus was wrong in what sense?
He did not predict the high rates of future growth in standards of living.
The Malthusian model performs poorly in explaining economic growth after the
Industrial Revolution.
If N is the working-age population, Q is the labor force, and U is the number of unemployed, then the participation rate is measured as
Q/N
The negative correlation between the vacancy rate and the unemployment rate is called
The Beveridge curve.
The Solow residual attempts to measure the amount of output not explained by
The direct contribution of labor and capital.
