Question 1

Which of the following is best characterized as being nonrivalrous?

Accepted Answer

A)  consumption goods 
B)  services 
C)  physical capital 
D)  knowledge 
E)  natural resources 
A)  consumption goods 
B)  services 
C)  physical capital 
D)  knowledge 
E)  natural resources D

Question 2

What are the major factors affecting standards of living and economic development across nations?

Accepted Answer

There are many factors that influence the level of standard of living and economic development - the stock of physical capital, the stock of human capital, the number of free trade agreements a nation is engaged in, the number of political barriers to international trade and technology adoption, the legal system which influences the extent to which greater competition is promoted among firms, and the political and economic systems which have been adopted. All of these factors affect total factor productivity and a nation's economic wellbeing.

Question 3

Nonrivalry means

Accepted Answer

A)  it is impossible or extremely costly to prevent someone from benefitting from a good. 
B)  it is possible to prevent a person from enjoying the benefits of a good. 
C)  consumption of a good does not decrease the consumption of the good by another person. 
D)  the consumption of a good by one person decreases consumption of the good by another person. 
E)  the quantity of a good that a person is able to consume is not influenced by the amount the person pays for the good. 
A)  it is impossible or extremely costly to prevent someone from benefitting from a good. 
B)  it is possible to prevent a person from enjoying the benefits of a good. 
C)  consumption of a good does not decrease the consumption of the good by another person. 
D)  the consumption of a good by one person decreases consumption of the good by another person. 
E)  the quantity of a good that a person is able to consume is not influenced by the amount the person pays for the good. C

Question 4

The production function exhibits

Accepted Answer

A)  increasing returns to scale in human capital. 
B)  decreasing returns to scale in human capital. 
C)  constant returns to scale in human capital. 
D)  increasing marginal product of physical capital. 
E)  decreasing marginal product of human capital. 
A)  increasing returns to scale in human capital. 
B)  decreasing returns to scale in human capital. 
C)  constant returns to scale in human capital. 
D)  increasing marginal product of physical capital. 
E)  decreasing marginal product of human capital.

Question 5

Which of the following statements best describes the characteristics of accumulating physical capital and human capital?

Accepted Answer

A)  Both physical capital accumulation and human capital accumulation are characterized by decreasing marginal returns. 
B)  Physical capital accumulation is subject to decreasing marginal returns, but human capital accumulation is not. 
C)  Human capital accumulation is subject to decreasing marginal returns, but physical capital accumulation is not. 
D)  Neither physical capital accumulation nor human capital accumulation is characterized by decreasing marginal returns. 
E)  Both physical capital accumulation and human capital accumulation are characterized by increasing marginal returns. 
A)  Both physical capital accumulation and human capital accumulation are characterized by decreasing marginal returns. 
B)  Physical capital accumulation is subject to decreasing marginal returns, but human capital accumulation is not. 
C)  Human capital accumulation is subject to decreasing marginal returns, but physical capital accumulation is not. 
D)  Neither physical capital accumulation nor human capital accumulation is characterized by decreasing marginal returns. 
E)  Both physical capital accumulation and human capital accumulation are characterized by increasing marginal returns.

Question 6

The Solow growth model

Accepted Answer

A)  cannot explain differences in standards of living across countries. 
B)  predicts differences in standards of living if total factor productivity is different in different countries. 
C)  can explain why output grows at a relatively high rate when capital per worker is high. 
D)  can explain why output grows at a low rate when population growth is low. 
E)  predicts that income per capita will diverge across countries. 
A)  cannot explain differences in standards of living across countries. 
B)  predicts differences in standards of living if total factor productivity is different in different countries. 
C)  can explain why output grows at a relatively high rate when capital per worker is high. 
D)  can explain why output grows at a low rate when population growth is low. 
E)  predicts that income per capita will diverge across countries.

Question 7

For the Solow model to accurately explain the observed divergence of growth experience around the world would require

Accepted Answer

A)  differences in savings rates across countries. 
B)  differences in population growth rates across countries. 
C)  barriers to the introduction of new technologies. 
D)  inadequate educational opportunities in poor countries. 
E)  differences in consumption per worker. 
A)  differences in savings rates across countries. 
B)  differences in population growth rates across countries. 
C)  barriers to the introduction of new technologies. 
D)  inadequate educational opportunities in poor countries. 
E)  differences in consumption per worker.

Question 8

The marginal product of human capital

Accepted Answer

A)  rises as human capital rises. 
B)  falls as human capital falls. 
C)  does not fall as human capital falls. 
D)  does not fall as human capital rises. 
E)  is constant. 
A)  rises as human capital rises. 
B)  falls as human capital falls. 
C)  does not fall as human capital falls. 
D)  does not fall as human capital rises. 
E)  is constant.

Question 9

In the Solow growth model, countries with identical total factor productivities, identical labour force growth rates, and identical savings rates

Accepted Answer

A)  always have identical levels of capital per worker and output per worker. 
B)  in equilibrium, have identical levels of capital per worker and output per worker. 
C)  in equilibrium, have identical levels of capital per worker but not necessarily identical levels of output per worker. 
D)  in equilibrium, have identical levels of output per worker but not necessarily identical levels of capital per worker. 
E)  there is no convergence to the same level of capital per worker or output per worker. 
A)  always have identical levels of capital per worker and output per worker. 
B)  in equilibrium, have identical levels of capital per worker and output per worker. 
C)  in equilibrium, have identical levels of capital per worker but not necessarily identical levels of output per worker. 
D)  in equilibrium, have identical levels of output per worker but not necessarily identical levels of capital per worker. 
E)  there is no convergence to the same level of capital per worker or output per worker.

Question 10

In the endogenous growth model presented in the text, suppose that u represents the fraction of time spent working (as opposed to accumulating human capital)and b represents the efficiency of human capital accumulation. The growth rate of human capital equals

Accepted Answer

A)  u(1 - b) - 1. 
B)  1 + b(1 - u). 
C)  (1 + b)(1 - u). 
D)  b(1 - u) - 1. 
E)  b(1 - u)². 
A)  u(1 - b) - 1. 
B)  1 + b(1 - u). 
C)  (1 + b)(1 - u). 
D)  b(1 - u) - 1. 
E)  b(1 - u)².

Question 11

What can governments do to promote economic development in light of technology adoption barriers?

Accepted Answer

A)  allow population growth rates to increase 
B)  improve the environment 
C)  increase government spending 
D)  promote free trade 
E)  promote labour unions 
A)  allow population growth rates to increase 
B)  improve the environment 
C)  increase government spending 
D)  promote free trade 
E)  promote labour unions

Question 12

The importance of barriers to the adoption of technologies is supported by research by

Accepted Answer

A)  P. Romer. 
B)  R. Lucas. 
C)  S. Parente and E. Prescott. 
D)  G. Glomm and B. Ravikumar. 
E)  Friedman and Lucas. 
A)  P. Romer. 
B)  R. Lucas. 
C)  S. Parente and E. Prescott. 
D)  G. Glomm and B. Ravikumar. 
E)  Friedman and Lucas.

Question 13

Parente and Prescott provide evidence that total factor productivity across countries can be explained by

Accepted Answer

A)  differences in political ideologies. 
B)  differences in economic systems. 
C)  differences in savings rates. 
D)  barriers to technology adoption. 
E)  differences in levels of human capital. 
A)  differences in political ideologies. 
B)  differences in economic systems. 
C)  differences in savings rates. 
D)  barriers to technology adoption. 
E)  differences in levels of human capital.

Question 14

A key characteristic of the production function in the endogenous growth model presented in the text is that

Accepted Answer

A)  there are increasing returns to scale in human capital. 
B)  there are decreasing returns to scale in human capital. 
C)  there are constant returns to scale in human capital. 
D)  at low levels of human capital, there are increasing returns to scale in human capital, while at high levels of human capital, there are decreasing returns to scale in human capital. 
E)  there are substantial diminishing marginal returns to human capital. 
A)  there are increasing returns to scale in human capital. 
B)  there are decreasing returns to scale in human capital. 
C)  there are constant returns to scale in human capital. 
D)  at low levels of human capital, there are increasing returns to scale in human capital, while at high levels of human capital, there are decreasing returns to scale in human capital. 
E)  there are substantial diminishing marginal returns to human capital.

Question 15

In the endogenous growth models of Lucas and Romer, an increase in a worker's level of human capital

Accepted Answer

A)  increases the amount of additional human capital he or she can produce, but does not increase the amount of output she can produce. 
B)  increases the amount of additional output he or she can produce, but does not increase the amount of human capital she can produce. 
C)  increases both the amount of additional human capital he or she can produce and the amount of output she can produce. 
D)  increases neither the amount of additional human capital he or she can produce nor the amount of output she can produce. 
E)  increases both the amount of additional human capital he or she can produce and the amount of total factor productivity produced. 
A)  increases the amount of additional human capital he or she can produce, but does not increase the amount of output she can produce. 
B)  increases the amount of additional output he or she can produce, but does not increase the amount of human capital she can produce. 
C)  increases both the amount of additional human capital he or she can produce and the amount of output she can produce. 
D)  increases neither the amount of additional human capital he or she can produce nor the amount of output she can produce. 
E)  increases both the amount of additional human capital he or she can produce and the amount of total factor productivity produced.

Question 16

The government can cause growth to increase in the endogenous growth model by

Accepted Answer

A)  cutting back on government spending. 
B)  promoting more efficient human capital accumulation and the devotion of more time to human capital accumulation. 
C)  closing schools so that people can consume more. 
D)  increasing physical capital investment. 
E)  reducing physical capital investment. 
A)  cutting back on government spending. 
B)  promoting more efficient human capital accumulation and the devotion of more time to human capital accumulation. 
C)  closing schools so that people can consume more. 
D)  increasing physical capital investment. 
E)  reducing physical capital investment.

Question 17

A human capital externality is

Accepted Answer

A)  when there is a human capital congestion effect. 
B)  when human capital causes pollution. 
C)  when someone purchases a book, for example. 
D)  when an individual has an unique skill. 
E)  when higher human capital for one person increases the human capital of others, or makes them more productive. 
A)  when there is a human capital congestion effect. 
B)  when human capital causes pollution. 
C)  when someone purchases a book, for example. 
D)  when an individual has an unique skill. 
E)  when higher human capital for one person increases the human capital of others, or makes them more productive.

Question 18

In the endogenous growth model, for the consumer more time spent working implies

Accepted Answer

A)  less human capital accumulation. 
B)  more human capital accumulation. 
C)  learning by doing human capital accumulation. 
D)  more leisure. 
E)  no effects on human capital accumulation. 
A)  less human capital accumulation. 
B)  more human capital accumulation. 
C)  learning by doing human capital accumulation. 
D)  more leisure. 
E)  no effects on human capital accumulation.

Question 19

In the endogenous growth model, more time spent accumulating human capital implies

Accepted Answer

A)  less consumption in the near term, but a higher growth rate of consumption in the future. 
B)  more consumption in the near term and a higher growth rate of consumption. 
C)  less consumption in the near term and no change in the growth rate of consumption. 
D)  more consumption in both the short and long run. 
E)  more consumption in the near term, but a lower growth rate of consumption in the future. 
A)  less consumption in the near term, but a higher growth rate of consumption in the future. 
B)  more consumption in the near term and a higher growth rate of consumption. 
C)  less consumption in the near term and no change in the growth rate of consumption. 
D)  more consumption in both the short and long run. 
E)  more consumption in the near term, but a lower growth rate of consumption in the future.

Question 20

The Solow growth model

Accepted Answer

A)  does a better job of explaining income inequality within a country than income inequality in the world. 
B)  is not consistent with post-industrial revolution development, in contrast to the Malthusian model. 
C)  explains research and development. 
D)  shows why China will exceed the United States in terms of per-capita income. 
E)  predicts convergence in incomes per capita across countries. 
A)  does a better job of explaining income inequality within a country than income inequality in the world. 
B)  is not consistent with post-industrial revolution development, in contrast to the Malthusian model. 
C)  explains research and development. 
D)  shows why China will exceed the United States in terms of per-capita income. 
E)  predicts convergence in incomes per capita across countries.

Which of the following is best characterized as being nonrivalrous?

What are the major factors affecting standards of living and economic development across nations?

Nonrivalry means

The production function exhibits

Which of the following statements best describes the characteristics of accumulating physical capital and human capital?

The Solow growth model

For the Solow model to accurately explain the observed divergence of growth experience around the world would require

The marginal product of human capital

In the Solow growth model, countries with identical total factor productivities, identical labour force growth rates, and identical savings rates

In the endogenous growth model presented in the text, suppose that u represents the fraction of time spent working (as opposed to accumulating human capital)and b represents the efficiency of human capital accumulation. The growth rate of human capital equals

What can governments do to promote economic development in light of technology adoption barriers?

The importance of barriers to the adoption of technologies is supported by research by

Parente and Prescott provide evidence that total factor productivity across countries can be explained by

A key characteristic of the production function in the endogenous growth model presented in the text is that

In the endogenous growth models of Lucas and Romer, an increase in a worker's level of human capital

The government can cause growth to increase in the endogenous growth model by

A human capital externality is

In the endogenous growth model, for the consumer more time spent working implies

In the endogenous growth model, more time spent accumulating human capital implies

The Solow growth model

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters

Exam 8: Income Disparity among Countries and Endogenous Growth

Which of the following is best characterized as being nonrivalrous?

What are the major factors affecting standards of living and economic development across nations?

Nonrivalry means

The production function exhibits

Which of the following statements best describes the characteristics of accumulating physical capital and human capital?

The Solow growth model

For the Solow model to accurately explain the observed divergence of growth experience around the world would require

The marginal product of human capital

In the Solow growth model, countries with identical total factor productivities, identical labour force growth rates, and identical savings rates

In the endogenous growth model presented in the text, suppose that u represents the fraction of time spent working (as opposed to accumulating human capital)and b represents the efficiency of human capital accumulation. The growth rate of human capital equals

What can governments do to promote economic development in light of technology adoption barriers?

The importance of barriers to the adoption of technologies is supported by research by

Parente and Prescott provide evidence that total factor productivity across countries can be explained by

A key characteristic of the production function in the endogenous growth model presented in the text is that

In the endogenous growth models of Lucas and Romer, an increase in a worker's level of human capital

The government can cause growth to increase in the endogenous growth model by

A human capital externality is

In the endogenous growth model, for the consumer more time spent working implies

In the endogenous growth model, more time spent accumulating human capital implies

The Solow growth model

Introduction

Measurement

Business Cycle Measurement

Consumer and Firm Behaviour: The Work–Leisure Decision and Profit Maximization

A Closed-Economy One-Period Macroeconomic Model

Search and Unemployment

Economic Growth: Malthus and Solow

A Two-Period Model: The Consumption–Savings Decision and Credit Markets

Credit Market Imperfections: Credit Frictions, Financial Crises, and Social Security

A Real Intertemporal Model with Investment

A Monetary Intertemporal Model: Money, Banking, Prices, and Monetary Policy

Business Cycle Models with Flexible Prices and Wages

New Keynesian Economics: Sticky Prices

Inflation: Phillips Curves and Neo-Fisherism

International Trade in Goods and Assets

Money in the Open Economy

Money, Inflation, and Banking: A Deeper Look

Filters