Question 1

A comparison of per-capita GDP in China and India over the last five decades indicates that

Accepted Answer

A) increases in physical capital contributed more to growth in China than in India 
B) increases in physical capital contributed more to growth in India than in China 
C) India's per-capita GDP grew more than China's due to lower population growth 
D) while per-capita GDP of the two countries increased at about the same rate, India's total factor productivity increased much more than China's 
E) while China's total factor productivity increased much more than India's, the per-capita GDP in both countries increased at about the same rate 
A) increases in physical capital contributed more to growth in China than in India 
B) increases in physical capital contributed more to growth in India than in China 
C) India's per-capita GDP grew more than China's due to lower population growth 
D) while per-capita GDP of the two countries increased at about the same rate, India's total factor productivity increased much more than China's 
E) while China's total factor productivity increased much more than India's, the per-capita GDP in both countries increased at about the same rate A

Question 2

Assume an endogenous growth model with labor augmenting technology and a production function of the form Y = F(K,AN), where A = 1.2(K/N) such that y = (1.2)k.If the rate of population growth is n = 0.06 and the rate of depreciation is d = 0.04, how large does the savings rate (s) have to be to achieve a per-capita growth rate of 8 percent?

Accepted Answer

A) 6% 
B) 10% 
C) 15% 
D) 24% 
E) 30% 
A) 6% 
B) 10% 
C) 15% 
D) 24% 
E) 30% C

Question 3

There is no simple relationship between the proportion of investment to output and the growth rate of per-capita output since

Accepted Answer

A) population growth rates differ among countries 
B) income growth rates differ among countries 
C) the efficiency of investment among countries can vary widely 
D) the savings rates among countries can vary widely 
E) none of the above 
A) population growth rates differ among countries 
B) income growth rates differ among countries 
C) the efficiency of investment among countries can vary widely 
D) the savings rates among countries can vary widely 
E) none of the above C

Question 4

The neoclassical growth model predicts conditional convergence for countries with the same population growth, level of technology, and

Accepted Answer

A) a higher savings rate 
B) a lower savings rate 
C) the same savings rate 
D) all of the above 
E) none of the above 
A) a higher savings rate 
B) a lower savings rate 
C) the same savings rate 
D) all of the above 
E) none of the above

Question 5

A production function that assumes a diminishing marginal product of capital

Accepted Answer

A) generates a straight savings line 
B) ensures that the savings line is always above the investment requirement line 
C) ensures that the savings line and the investment requirement line cross 
D) is essential to the endogenous growth model 
E) violates important microeconomic principles 
A) generates a straight savings line 
B) ensures that the savings line is always above the investment requirement line 
C) ensures that the savings line and the investment requirement line cross 
D) is essential to the endogenous growth model 
E) violates important microeconomic principles

Question 6

If we have an aggregate production function of the form Y = aK, at what capital-labor ratio can a steady-state equilibrium be reached?

Accepted Answer

A) k = sa - (n + d) 
B) k = sa + (n - d) 
C) k = sa/(n + d) 
D) k = ay/(n + d) 
E) never 
A) k = sa - (n + d) 
B) k = sa + (n - d) 
C) k = sa/(n + d) 
D) k = ay/(n + d) 
E) never

Question 7

Which of the following countries annual growth rate of GDP per capita between 1988 and 2010 was closest to that of the United States?

Accepted Answer

A) China 
B) Egypt 
C) Indonesia 
D) Tanzania 
E) Thailand 
A) China 
B) Egypt 
C) Indonesia 
D) Tanzania 
E) Thailand

Question 8

Which of the following was NOT a common element contributing to the growth of the four "Asian Tigers" between 1966 and 1990?

Accepted Answer

A) an increase in the labor force participation rate 
B) high educational achievement 
C) a high savings rate 
D) emphasis on laissez-faire economics 
E) an increase in total factor productivity achieved by higher levels of inputs 
A) an increase in the labor force participation rate 
B) high educational achievement 
C) a high savings rate 
D) emphasis on laissez-faire economics 
E) an increase in total factor productivity achieved by higher levels of inputs

Question 9

Between 1966 and 1990, all four "Asian Tigers" achieved economic growth mostly through

Accepted Answer

A) hard work and sacrifice 
B) protecting domestic industries through tariffs 
C) substantially increasing growth in total factor productivity 
D) controlling population growth 
E) a large degree of government intervention 
A) hard work and sacrifice 
B) protecting domestic industries through tariffs 
C) substantially increasing growth in total factor productivity 
D) controlling population growth 
E) a large degree of government intervention

Question 10

Between 1966 and 1990 Singapore's GDP per capita grew at an average annual rate of 6.8%.During the same time frame its growth rate in total factor productivity was

Accepted Answer

A) 0)2% 
B) 1)2% 
C) 2)2% 
D) 3)2% 
E) 4)2% 
A) 0)2% 
B) 1)2% 
C) 2)2% 
D) 3)2% 
E) 4)2%

Question 11

The four "Asian Tigers" achieved high economic growth between 1960 and 1990 since they

Accepted Answer

A) initially protected domestic firms, but then exposed them to foreign competition 
B) had very high savings rates 
C) had large increases in the labor force participation rates of women 
D) increased inputs substantially, although total factor productivity did not increase substantially 
E) all of the above 
A) initially protected domestic firms, but then exposed them to foreign competition 
B) had very high savings rates 
C) had large increases in the labor force participation rates of women 
D) increased inputs substantially, although total factor productivity did not increase substantially 
E) all of the above

Question 12

Which of the following is NOT an important factor in establishing high growth in GDP per capita for a country?

Accepted Answer

A) a stable monetary growth rate 
B) a high savings rate 
C) low population growth 
D) a predictable economic and political environment 
E) policies to encourage industries to compete in world markets 
A) a stable monetary growth rate 
B) a high savings rate 
C) low population growth 
D) a predictable economic and political environment 
E) policies to encourage industries to compete in world markets

Question 13

Assume India's income level is now roughly 5% of that of the United States.Assuming there is no change in the savings rates and the levels of technology of these two countries, how many years will it take for India to reach 10% of the U.S.'s income level?

Accepted Answer

A) 10 
B) 20 
C) 25 
D) 35 
E) 50 
A) 10 
B) 20 
C) 25 
D) 35 
E) 50

Question 14

Which of the following policy options is likely to be most successful in getting a poor country out of the poverty trap?

Accepted Answer

A) expansionary fiscal policy 
B) expansionary monetary policy 
C) labor market policies 
D) programs to limit population growth 
E) investment subsidies 
A) expansionary fiscal policy 
B) expansionary monetary policy 
C) labor market policies 
D) programs to limit population growth 
E) investment subsidies

Question 15

Roughly how many years will it take a country that grows at an average rate of 2% per year to double the size of its GDP?

Accepted Answer

A) 100 
B) 50 
C) 35 
D) 20 
E) 15 
A) 100 
B) 50 
C) 35 
D) 20 
E) 15

Question 16

For a developing country that wants to increase its stock of real capital fairly quickly, which of the following is NOT a valid option?

Accepted Answer

A) implementing policies designed to increase educational levels 
B) asking foreign firms for direct investments in the country 
C) borrowing funds from the World Bank for real capital investments 
D) asking other countries for foreign aid to buy new machines 
E) increasing private domestic saving 
A) implementing policies designed to increase educational levels 
B) asking foreign firms for direct investments in the country 
C) borrowing funds from the World Bank for real capital investments 
D) asking other countries for foreign aid to buy new machines 
E) increasing private domestic saving

Question 17

The concept of diminishing marginal returns implies that

Accepted Answer

A) output cannot decrease as long as labor is substituted for capital 
B) output decreases if either labor or capital is decreased 
C) output increases but at a decreasing rate as the amount of labor is increased and the amount of capital remains fixed 
D) if the capital stock is kept constant, output cannot increase even if more labor is available 
E) output increases but only if the amounts of both labor and capital increase 
A) output cannot decrease as long as labor is substituted for capital 
B) output decreases if either labor or capital is decreased 
C) output increases but at a decreasing rate as the amount of labor is increased and the amount of capital remains fixed 
D) if the capital stock is kept constant, output cannot increase even if more labor is available 
E) output increases but only if the amounts of both labor and capital increase

Question 18

Countries can achieve continued economic growth as long as

Accepted Answer

A) technological advances continue 
B) educational progress continues 
C) intelligent resource management is practiced 
D) all of the above 
E) only A and B 
A) technological advances continue 
B) educational progress continues 
C) intelligent resource management is practiced 
D) all of the above 
E) only A and B

Question 19

If we consider the per-capita GDP of China and India over the last five decades, we realize that

Accepted Answer

A) despite vast differences in population growth, both countries' per-capita GDP grew at approximately the same rate 
B) while investment in human capital is important for economic growth, so are institutional changes and openness to trade 
C) India's growth in per-capita GDP was higher than China's due to more investment in human capital 
D) neither country's per-capita GDP grew significantly until the 1990s 
E) the difference in growth rates between these countries can largely be explained by the difference in years of schooling 
A) despite vast differences in population growth, both countries' per-capita GDP grew at approximately the same rate 
B) while investment in human capital is important for economic growth, so are institutional changes and openness to trade 
C) India's growth in per-capita GDP was higher than China's due to more investment in human capital 
D) neither country's per-capita GDP grew significantly until the 1990s 
E) the difference in growth rates between these countries can largely be explained by the difference in years of schooling

Question 20

An endogenous growth model predicts that if the rates of both population growth and saving increase, then the growth rate of GDP per capita will

Accepted Answer

A) increase 
B) decrease 
C) stay the same 
D) temporarily increase, but then go back to its original level 
E) either increase, decrease, or stay the same (we cannot say for sure) 
A) increase 
B) decrease 
C) stay the same 
D) temporarily increase, but then go back to its original level 
E) either increase, decrease, or stay the same (we cannot say for sure)

Exam 4: Growth and policy

A comparison of per-capita GDP in China and India over the last five decades indicates that

There is no simple relationship between the proportion of investment to output and the growth rate of per-capita output since

The neoclassical growth model predicts conditional convergence for countries with the same population growth, level of technology, and

A production function that assumes a diminishing marginal product of capital

If we have an aggregate production function of the form Y = aK, at what capital-labor ratio can a steady-state equilibrium be reached?

Which of the following countries annual growth rate of GDP per capita between 1988 and 2010 was closest to that of the United States?

Which of the following was NOT a common element contributing to the growth of the four "Asian Tigers" between 1966 and 1990?

Between 1966 and 1990, all four "Asian Tigers" achieved economic growth mostly through

Between 1966 and 1990 Singapore's GDP per capita grew at an average annual rate of 6.8%.During the same time frame its growth rate in total factor productivity was

The four "Asian Tigers" achieved high economic growth between 1960 and 1990 since they

Which of the following is NOT an important factor in establishing high growth in GDP per capita for a country?

Assume India's income level is now roughly 5% of that of the United States.Assuming there is no change in the savings rates and the levels of technology of these two countries, how many years will it take for India to reach 10% of the U.S.'s income level?

Which of the following policy options is likely to be most successful in getting a poor country out of the poverty trap?

Roughly how many years will it take a country that grows at an average rate of 2% per year to double the size of its GDP?

For a developing country that wants to increase its stock of real capital fairly quickly, which of the following is NOT a valid option?

The concept of diminishing marginal returns implies that

Countries can achieve continued economic growth as long as

If we consider the per-capita GDP of China and India over the last five decades, we realize that

An endogenous growth model predicts that if the rates of both population growth and saving increase, then the growth rate of GDP per capita will

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Aggregate supply and the phillips curve

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