Question 1

Increases in the rate of growth of income per person in the United States in the mid-1990s is mostly likely the result of:

Accepted Answer

A) increases in human capital. 
B) increases in physical capital. 
C) advances in information technology. 
D) an increase in the saving rate. 
A) increases in human capital. 
B) increases in physical capital. 
C) advances in information technology. 
D) an increase in the saving rate.

Question 2

Explain how the Solow growth model differs from models of endogenous growth with respect to:
a. the sources of technological progress.
b. returns to capital.

Accepted Answer

a. The Solow growth model assumes techno

Question 3

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

Accepted Answer

A) 0. 
B) g. 
C) n. 
D) n + g. 
A) 0. 
B) g. 
C) n. 
D) n + g.

Question 4

Explain why additional capital generates both positive and negative impacts on steady-state consumption per worker in the Solow growth model with population growth and technological change.

Accepted Answer

Increasing the capital per effective wo

Question 5

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:

Accepted Answer

A) will be at a lower level than in the steady state of the high-saving economy. 
B) will be at a higher level than in the steady state of the high-saving economy. 
C) will be at the same level as in the steady state of the high-saving economy. 
D) will grow at a slower rate than in the high-saving economy. 
A) will be at a lower level than in the steady state of the high-saving economy. 
B) will be at a higher level than in the steady state of the high-saving economy. 
C) will be at the same level as in the steady state of the high-saving economy. 
D) will grow at a slower rate than in the high-saving economy.

Question 6

In the Solow growth model with population growth and technological change, the steady-state growth rate of income per person depends on:

Accepted Answer

A) the rate of population growth. 
B) the saving rate. 
C) the rate of technological progress. 
D) the rate of population growth plus the rate of technological progress. 
A) the rate of population growth. 
B) the saving rate. 
C) the rate of technological progress. 
D) the rate of population growth plus the rate of technological progress.

Question 7

In a Solow model with technological change, if population grows at a 2 percent rate and the efficiency of labor grows at a 3 percent rate, then in the steady state, output per actual worker grows at a percent rate.

Accepted Answer

A) 0 
B) 2 
C) 3 
D) 5 
A) 0 
B) 2 
C) 3 
D) 5

Question 8

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

Accepted Answer

A) 0. 
B) g. 
C) n. 
D) n + g. 
A) 0. 
B) g. 
C) n. 
D) n + g.

Question 9

Other things being equal, all of the following government policies are likely to increase national saving except:

Accepted Answer

A) decreasing taxes on savings accounts. 
B) running a budget deficit. 
C) running a budget surplus. 
D) retiring part of the national debt. 
A) decreasing taxes on savings accounts. 
B) running a budget deficit. 
C) running a budget surplus. 
D) retiring part of the national debt.

Question 10

Suppose that technological change is not labor-augmenting, but affects only capital. Use the Solow growth model of Chapter 9 to graphically illustrate the impact of the slower rate of technological change that increases the rate at which capital wears out (the rate of depreciation increases) on the steady-state capital-labor ratio and the steady-state level of output per worker.
Be sure to label the: a. axes; b. curves; c. initial steady-state levels; d. terminal steady-state levels; and e. the direction curves shift.

Accepted Answer

The answer of Suppose that technological change is not labor-augmenting,...

Question 11

In a Solow model with technological change, if population grows at a 2 percent rate and the efficiency of labor grows at a 3 percent rate, then in the steady state, total output grows at a percent rate.

Accepted Answer

A) 0 
B) 2 
C) 3 
D) 5 
A) 0 
B) 2 
C) 3 
D) 5

Question 12

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

Accepted Answer

A) tax breaks to encourage homeownership. 
B) the temporary monopoly granted by the patent system. 
C) tax breaks for research and development. 
D) subsidies given by the National Science Foundation. 
A) tax breaks to encourage homeownership. 
B) the temporary monopoly granted by the patent system. 
C) tax breaks for research and development. 
D) subsidies given by the National Science Foundation.

Question 13

In the Solow model with technological progress, by increasing the efficiency of labor at rate g:

Accepted Answer

A) the real wage and the real rental price of capital both grow at rate g. 
B) the real wage grows at rate g but the real rental price of capital is constant. 
C) the real wage is constant but the real rental price of capital grows at rate 
D) g. both the real wage and the real rental price of capital are constant 
A) the real wage and the real rental price of capital both grow at rate g. 
B) the real wage grows at rate g but the real rental price of capital is constant. 
C) the real wage is constant but the real rental price of capital grows at rate 
D) g. both the real wage and the real rental price of capital are constant

Question 14

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:

Accepted Answer

A) capital stock grows faster than does the labor force. 
B) capital stock grows faster than does the number of effective 
C) workers. rate of depreciation constantly decreases. 
D) saving rate constantly increases. 
A) capital stock grows faster than does the labor force. 
B) capital stock grows faster than does the number of effective 
C) workers. rate of depreciation constantly decreases. 
D) saving rate constantly increases.

Question 15

Based on the Solow growth model with population growth and labor-augmenting technological progress, explain how each of the following policies would affect the steady-state level and steady-state growth rate of total output per person:
a. a reduction in the government's budget deficit
b. grants to support research and development
c. tax incentives to increase private saving
d. greater protection of private property rights

Accepted Answer

a. The reduction in the budget deficit i

Question 16

Suppose a government is able to impose controls that limit the number of children people can have. Use the Solow growth model of Chapter 9 to graphically illustrate the impact of the slower rate of population growth on the
steady-state capital-labor ratio and the steady-state level of output per worker.
Be sure to label the: a. axes; b. curves; c. initial steady-state levels; d. terminal steady-state levels; and e. the direction curves shift.

Accepted Answer

The answer of Suppose a government is able to impose...

Question 17

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

Accepted Answer

A) a reduction in labor productivity may occur. 
B) new production processes may be devised. 
C) old capital may be made more productive. 
D) the government may need to adopt an industrial policy. 
A) a reduction in labor productivity may occur. 
B) new production processes may be devised. 
C) old capital may be made more productive. 
D) the government may need to adopt an industrial policy.

Question 18

Hypotheses to explain the positive correlation between factor accumulation and production efficiency include each of the following except:

Accepted Answer

A) the quality of a nation's institutions influences both factor accumulation and production 
B) efficiency. capital accumulation causes greater production efficiency. 
C) efficient economies make capital accumulation unnecessary. 
D) an efficient economy encourages capital (including human capital) accumulation. 
A) the quality of a nation's institutions influences both factor accumulation and production 
B) efficiency. capital accumulation causes greater production efficiency. 
C) efficient economies make capital accumulation unnecessary. 
D) an efficient economy encourages capital (including human capital) accumulation.

Question 19

The economy of Macroland can be described by the Solow growth model. In Macroland the labor force grows at 3 percent per year, labor-augmenting technology increases at 2 percent per year, the saving rate is 15 percent per year, and the rate of capital depreciation is 10 percent per year. Choosing from among the following variables-output per effective worker, output per worker, total output, labor force, capital per worker, and capital per effective worker-which variables will be growing at a:
a. 2 percent rate?
b. 3 percent rate?
c. 5 percent rate?
d. 0 percent rate?

Accepted Answer

a. output per worker, capital

Question 20

In a Solow model with technological change, if population grows at a 2 percent rate and the efficiency of labor grows at a 3 percent rate, then in the steady state, output per effective worker grows at a percent rate.

Accepted Answer

A) 0 
B) 2 
C) 3 
D) 5 
A) 0 
B) 2 
C) 3 
D) 5

Increases in the rate of growth of income per person in the United States in the mid-1990s is mostly likely the result of:

Explain how the Solow growth model differs from models of endogenous growth with respect to: a. the sources of technological progress. b. returns to capital.

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

Explain why additional capital generates both positive and negative impacts on steady-state consumption per worker in the Solow growth model with population growth and 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:

In the Solow growth model with population growth and technological change, the steady-state growth rate of income per person depends on:

In a Solow model with technological change, if population grows at a 2 percent rate and the efficiency of labor grows at a 3 percent rate, then in the steady state, output per actual worker grows at a percent rate.

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

Other things being equal, all of the following government policies are likely to increase national saving except:

In a Solow model with technological change, if population grows at a 2 percent rate and the efficiency of labor grows at a 3 percent rate, then in the steady state, total output grows at a percent rate.

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

In the Solow model with technological progress, by increasing the efficiency of labor at rate g:

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:

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

Hypotheses to explain the positive correlation between factor accumulation and production efficiency include each of the following except:

In a Solow model with technological change, if population grows at a 2 percent rate and the efficiency of labor grows at a 3 percent rate, then in the steady state, output per effective worker grows at a percent rate.

The Science of Macroeconomics

The Data of Macroeconomics

National Income Where It Comes From and Where It Goes

Money and Inflation

The Open Economy

Unemployment

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Aggregate Demand I: Building the Is-Lm Model

Aggregate Demand II: Applying the Is-Lm Model

The Open Economy Revisited: the Mundell-Fleming Model and the Exchange-Rate Regime

Filters

Exam 9: Introduction to Economic Fluctuations

Increases in the rate of growth of income per person in the United States in the mid-1990s is mostly likely the result of:

Explain how the Solow growth model differs from models of endogenous growth with respect to: a. the sources of technological progress. b. returns to capital.

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

Explain why additional capital generates both positive and negative impacts on steady-state consumption per worker in the Solow growth model with population growth and 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:

In the Solow growth model with population growth and technological change, the steady-state growth rate of income per person depends on:

In a Solow model with technological change, if population grows at a 2 percent rate and the efficiency of labor grows at a 3 percent rate, then in the steady state, output per actual worker grows at a percent rate.

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

Other things being equal, all of the following government policies are likely to increase national saving except:

In a Solow model with technological change, if population grows at a 2 percent rate and the efficiency of labor grows at a 3 percent rate, then in the steady state, total output grows at a percent rate.

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

In the Solow model with technological progress, by increasing the efficiency of labor at rate g:

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:

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

Hypotheses to explain the positive correlation between factor accumulation and production efficiency include each of the following except:

In a Solow model with technological change, if population grows at a 2 percent rate and the efficiency of labor grows at a 3 percent rate, then in the steady state, output per effective worker grows at a percent rate.

The Science of Macroeconomics

The Data of Macroeconomics

National Income Where It Comes From and Where It Goes

Money and Inflation

The Open Economy

Unemployment

Economic Growth I: Capital Accumulation and Population Growth

Economic Growth II: Technology, Empirics, and Policy

Aggregate Demand I: Building the Is-Lm Model

Aggregate Demand II: Applying the Is-Lm Model

The Open Economy Revisited: the Mundell-Fleming Model and the Exchange-Rate Regime

Filters