Econ 309 clicker questions
According to the rule of 70, if an economy averages a 4 percent growth rate, it will take about ________ years to double in size.
17.5
Suppose x grows at a rate of percent and y grows at a rate of percent. If z = y × x, then z grows at ________ percent; if z = x/ y, z grows at ________ percent.
17; −7
Over the past 50 years, Brazil's population growth rate has averaged about 2.3 percent. According to the rule of 70, Brazil's population will double in about ________ years.
30
The two main inputs we consider in a simple production function are:
capital and labor
As a rough approximation, differences in capital per person explain about ________ of the difference in incomes between the richest and poorest countries, while differences in ________ explain ________.
one-fourth; total factor productivity; three-fourths
A firm's profit is simply defined as:
revenues minus costs.
If MPK > r, the firm:
should hire more capital until MPK = r.
Despite the costs associated with economic growth, most believe:
the benefits far outweigh the costs.
Which of the following is an example of a ratio scale?
1, 5, 25, 125, 625...
Between 1970 and 1976, Israel's average inflation rate was about 65 percent per year. With that rate of inflation, prices would double about every ________ years, using the rule of 70.
1.1
Imagine increases in the parameters of the Solow model that are all identical in magnitude. Which one of the following parameters will result in the largest increase in steady-state output?
The productivity parameter
Which of the following is included in TFP?
The quality of labor
If population and GDP are growing at the same rates, then per capita GDP does not grow. True or False
True
If the marginal product of capital is more than the rental rate of capital, the firm should rent more capital. True or False
True
In 1990, a country's per capita income was $1,000. By the year 2000, it was $1,650. The average annual growth rate was approximately 0.05. True or False
True
In the Solow diagram, an increase in the investment rate will cause a decrease in consumption for all levels of capital.
True
In the long run, the real interest rate is equal to the marginal product of capital.
True
In the long run, the real interest rate is equal to the marginal product of capital. T or F
True
The change in the capital stock is a flow variable.
True
Total factor productivity explains a larger amount of the difference in income per capita in the Solow model than in the production model.
True
Which of the following questions does the solow model not help explain?
Why do countries sustain growth in the long run.
Which of the following questions does the Solow model NOT help to explain?
Why do countries sustain growth in the long run?
If the production function is given by Y=K^1/3 * L^2/3 and K = 27 and L = 8, total output equals:
Y=12
In the equation Y=F(K,L)=Abar*K^1/3*L^2/3, the lack of a "bar" over the L means that it is:
an endogenous variable.
The relationship between pollution and per capita GDP is documented as:
an inverse U.
The production function Y=K^1/3*L^2/3 describes how ________ can be combined to generate output.
any amount of capital and labor
The marginal product of the labor curve represents the:
demand for labor.
Differences in output across economies with the same per capita capital stock can be explained by:
differences in total factor productivity.
A production function exhibits constant returns to scale when you:
double each input—you double the output.
A production function exhibits decreasing returns to scale when you:
double each input—you less than double the output.
The rule of 70 states that if yt grows at a rate of g percent per year, then the number of years it takes yt to:
double is approximately equal to 70/ g.
According to the Solow model two countries will grow at different rates if:
both have different steady-state level of output and the same capital stock below the steady-state level
Which of the following inputs do we generally consider in a simple production function?
capital
The solution to the firm's maximization problem is how much:
capital and labor to hire, given the rental rate of capital and labor's wage rate.
Consider an economy where the only consumption good is ice cream. Firms in this economy must:
choose how many workers to hire and how many ice cream machines to rent.
One of the key characteristics of the Cobb-Douglas production function is:
constant returns to scale.
In the last 300 years, the standards of living in the richest and poorest countries have converged. True or False
False
The Solow model is a static model and thus can only tell us the levels of our endogenous variables in steady state. True or False
False
Do all countries exhibit the transition dynamics predicted by the solow growth model ? For example the South Korea and Philipines case study?
No
The influences of institutions on economic performance can be easily contrasted using:
North and South Korea
If MPL < w, the firm:
should fire some labor until MPL = w.
The birthplace of modern economic growth was in ________ during the ________ century.
the United Kingdom; mid-eighteenth
The marginal product of labor is defined as:
the additional output generated by hiring an additional unit of labor.
If net investment is negative,
the economy is above its steady state and growth of output is negative.
If net investment is negative:
the economy is above its steady state and growth of output is negative.
An economy starts in steady state. A war causes a massive destruction of the capital stock. This shock will cause
the growth rate of output to rise initially as the economy begins to converge to the old steady state.
If MPK = r, the firm:
has the optimal amount of capital.
Both the United States and France, among the richest countries in the world, have similar levels of education and capital per worker, but U.S. citizens enjoy higher incomes than the French. One explanation might be differences in:
institutions.
The level of consumption:
is largest when the economy is above its steady state.
Consider two economies. If each country has the same production function and the same amount of capital and labor, the country that ________ produces more.
is more productive
In the equation Y=F(K,L)=Abar*K^1/3*L^2/3 , the "bar" over the A means that it is a:
parameter that is fixed and exogenous.
Which of the following production functions exhibits increasing returns to scale?
Y= K^1/2 * L^3/4
The firm's profit maximization problem is:
max π = F( K, L) − rK − wL{ K, L}.
A construction company produces a $200,000 house using $50,000 worth of wood and steel, in addition to $60,000 of labor hours. The value added by the construction company is?
$150,000
Suppose India has a per capita GDP that is .074 times the United States GDP. It has a capital-per-person ratio that is .035 times that of the United States. Compared to the United States, the implied value of total factor productivity for India is approximately?
.23
In 1994, your parents made an investment of $4,000. By 2015, the investment grew to $32,000. Based on the figure below, what was the average annual growth rate of this investment?
10%
With an average annual growth rate of 5 percent per year, per capita income will increase by what factor over a century?
126
If Y=A(K^1/3)(L^2/3) and A grows at a rate of 1 percent per year, K grows at a rate of -3 percent per year, and L grows at a rate of 3 percent per year, then the growth rate of Y is?
2%
According to the International Monetary Fund, income per capita in Bhutan in 2015 was Int$8,201 while income per capita in Chad in the same year was Int$1,214. If Bhutan's investment rate is 40% and Chad's investment rate is 10%, what is the productivity ratio ? Round to the nearest tenth. Assume both countries are in their steady states.
2.3
The era of modern economic growth began about:
250 years ago
If per capita GDP in 2015 was $1,000 and in 2016 was $1,200, the growth rate of per capita GDP was:
20 percent
If the population of Romania was about 22 million in 2010 and the average population growth rate is 0.2 percent, then Romania's "initial" population was about ________ million in 1970.
20.3
If the population of Romania was about 20.3 million in 1970 and the average population growth rate is 0.2 percent, then Romania's population would have been about ________ million in 2010.
22.0
If the productivity parameter is assumed to equal 1, the production model: a) correctly identifies that countries are richer if they have more capital. b) incorrectly predicts that poor countries are substantially richer than they are. c) correctly predicts that some countries are richer than the United States. d) All of these choices are correct.
All choices are correct.
Output per person is higher when: A. a country is more efficient in adopting technology. B. a country has a higher capital-to-population ratio. C. a country has stronger property rights & contract enforcement. D. All choices are correct.
All choices are correct.
The United States and Chile have both grown at about 2 percent per year for the last 40 years. By the principle of transition dynamics, what does this imply?
Both countries are at their steady states.
The equation Y=K^a * L^1-a is called the ________ function.
Cobb-Douglas production
All else equal, a higher rate of depreciation, increases the capital stock.
False
If an economy has a higher investment rate and a higher depreciation rate, the economy will have a higher level of output.
False
Suppose that in 1955 Japan had an initial per capita GDP of $15,000 per year and China had a per capita GDP of $2,500. But China is growing at 7 percent per year and Japan is growing at 2 percent per year. In 2015, ________ would have been the lower-income country, with a per capita GDP of approximately ________.
Japan; $49,000
Which of the following does NOT increase U.S. GDP?
The U.S. government social security payments.
In the production model of CH. 4, which of the following is NOT an exogenous variable of parameter?
The amount of capital.
Imagine a two-good economy where the quantity of the goods produced is unchanged over time, but where prices have increased. In the most recent year, real GDP will be?
The largest number when using the Paasche index.
According to the principle of transition dynamics, which economy will grow fastest?
The same country 1 year after the natural disaster destroyed most of the capital stock
The equation Y=F(K,L)=Abar*K^a*L^1-a is an example of
a production function
In the production function Y=F(K,L)=Abar*Kbar^1/3*L^2/3, (Abar) represents:
a productivity parameter
Mathematically, an economic model is:
a set of equations.
What is an explanation for why an economy eventually settles in steady state?
a. The production function exhibits diminishing returns to capital. b. The capital stock depreciates at a constant rate. c. Eventually, investment generated is equal to the amount of capital depreciated. d. ALL OF THESE ARE CORRECT
Which of the following explain(s) differences in total factor productivity?
a. institutions b. human capital c. natural resources d. technology e. ALL OF THESE CHOICES ARE CORRECT
Which of the following is/are essential for economic success?
a. property rights b. the rule of law c. contract enforcement d. the separation of powers e. ALL OF THESE CHOICES ARE CORRECT
If per capita GDP in 2014 was $900, in 2015 was $1,000, and in 2016 was $1,200, the growth rate of per capita GDP between 2014 and 2016 was:
about 33 percent.
If depreciation exceeds new investment, the capital stock in the economy is:
above its steady-state level
The law of diminishing marginal product to capital means that as we add additional units of capital:
but hold labor constant, output will increase, but at a decreasing rate.
In models with perfect competition:
economic profits are zero.
A model is a(n) ________ representation of ________ world that we use to study economic phenomena.
mathematical; a toy
Which of the following does NOT explain differences in total factor productivity?
the labor stock