Question 1

What test should be performed to determine whether the government should engage in policies that affect economic growth?

Accepted Answer

The test involves answering two questions.First,is the private sector providing enough incentives? Second,if the private sector is not providing enough incentives,can the government improve matters without a large risk of government failure? If the answer to the first question is no and the answer to the second question is yes,there is room for government intervention.

Question 2

Innovations apply only to new types of capital.

Accepted Answer

A) True 
 B)False  False

Question 3

If the growth rate of technology is 3 percent over a given period of time and there has been no change in the amount of capital per hour worked,then,based on Solow's growth accounting formula,the growth rate of real GDP per hour of work will be

Accepted Answer

A) 3.33 percent. 
B) 1 percent. 
C) 2.67 percent. 
D) 3 percent. 
E) 2 percent. 
A) 3.33 percent. 
B) 1 percent. 
C) 2.67 percent. 
D) 3 percent. 
E) 2 percent. D

Question 4

If output per hour grows by 4 percent and capital per hour of work grows by 6 percent,then,based on Solow's growth accounting formula,the growth rate of technology is

Accepted Answer

A) 6 percent. 
B) .67 percent. 
C) 2 percent 
D) 0 percent. 
E) 1 percent. 
A) 6 percent. 
B) .67 percent. 
C) 2 percent 
D) 0 percent. 
E) 1 percent.

Question 5

Explain why the contribution of capital per hour worked to the growth rate of real GDP is multiplied by one-third in the growth accounting formula.

Accepted Answer

According to the text,there are two reas

Question 6

Given the same amount of natural resources,which of the following conditions leads to a higher rate of economic growth?

Accepted Answer

A) A command and control economy. 
B) A corrupt government. 
C) A country in civil war. 
D) An economy open to foreign immigration and capital. 
E) A landlocked country. 
A) A command and control economy. 
B) A corrupt government. 
C) A country in civil war. 
D) An economy open to foreign immigration and capital. 
E) A landlocked country.

Question 7

An engineering company has developed a gadget to help families control the amount of time their children watch TV.What would be an example of a technological spillover in this case? Technological reasons aside,how could this engineering company prevent this kind of technological spillover from occurring?

Accepted Answer

A similar type of gadget could be used t

Question 8

According to economist Daron Acemoglu,well-functioning institutions are a fundamental cause of economic growth.

Accepted Answer

A) True 
 B)False

Question 9

Which of the following statements is true about the period 1976-1995?

Accepted Answer

A) Both the capital growth and the growth of technology slowed during this period.However,the slowdown in capital growth was greater than the slowdown in technology growth. 
B) Productivity rebounded during this period because the growth of capital and the growth of technology both rose.However,the rise in capital growth was greater than the rise in technology growth. 
C) The growth of capital and the growth of technology both rose during this period.However,the rise in capital growth was less than the rise in technology growth. 
D) Productivity slowed down during this period only because the growth of technology slowed down. 
E) Productivity slowed down during this period because the growth of capital and the growth of technology both slowed.However,the slowdown in capital growth was less than the slowdown in technology growth. 
A) Both the capital growth and the growth of technology slowed during this period.However,the slowdown in capital growth was greater than the slowdown in technology growth. 
B) Productivity rebounded during this period because the growth of capital and the growth of technology both rose.However,the rise in capital growth was greater than the rise in technology growth. 
C) The growth of capital and the growth of technology both rose during this period.However,the rise in capital growth was less than the rise in technology growth. 
D) Productivity slowed down during this period only because the growth of technology slowed down. 
E) Productivity slowed down during this period because the growth of capital and the growth of technology both slowed.However,the slowdown in capital growth was less than the slowdown in technology growth.

Question 10

Suppose a worker at a computer company rearranges existing machines and labor and increases production in the process.Using the production function,with output on the vertical axis and labor on the horizontal axis,this would be described as

Accepted Answer

A) an upward shift of the curve combined with an upward movement along the curve. 
B) a movement upward along the curve. 
C) a movement downward along the curve. 
D) a downward shift of the curve. 
E) an upward shift of the curve. 
A) an upward shift of the curve combined with an upward movement along the curve. 
B) a movement upward along the curve. 
C) a movement downward along the curve. 
D) a downward shift of the curve. 
E) an upward shift of the curve.

Question 11

Requiring workers to work on weekends and holidays is an example of

Accepted Answer

A) labor-saving technological change. 
B) creative destruction. 
C) capital-saving technological change. 
D) an invention. 
E) diffusion. 
A) labor-saving technological change. 
B) creative destruction. 
C) capital-saving technological change. 
D) an invention. 
E) diffusion.

Question 12

Which of the following types of government spending are likely to help economic growth? Why?
(A)FBI spending on advertising for new recruits
(B)Spending by NASA on research for a new solar panel
(C)Funding to improve the interstate highway system
(D)Spending by the federal government to send all 4-year-olds to preschool
(E)Spending by the federal government on research into alternative fuels to gasoline
(F)Subsidies to place more artwork in public places,such as the cows in Chicago

Accepted Answer

(A) This expenditure will not contribute

Question 13

Policies designed to improve education in grades K through 12 will result primarily in

Accepted Answer

A) more diffusion. 
B) better organization. 
C) more human capital. 
D) more creative destruction. 
E) more learning by doing. 
A) more diffusion. 
B) better organization. 
C) more human capital. 
D) more creative destruction. 
E) more learning by doing.

Question 14

Public radio is an example of a good that is

Accepted Answer

A) rivalrous and excludable. 
B) nonrivalrous and excludable. 
C) rivalrous and nonexcludable. 
D) nonrivalrous and nonexcludable. 
E) neither rivalrous nor nonrivalrous. 
A) rivalrous and excludable. 
B) nonrivalrous and excludable. 
C) rivalrous and nonexcludable. 
D) nonrivalrous and nonexcludable. 
E) neither rivalrous nor nonrivalrous.

Question 15

According to Solow's growth accounting formula,the growth rate of capital per hour of work is multiplied by one-third.This means that

Accepted Answer

A) for every 1 percent increase in capital per hour of work,GDP per hour of work will increase by one-third of a percent. 
B) for every 1 percent increase in capital per hour of work,GDP per hour of work will increase by 3 percent. 
C) for every 1 percent increase in GDP per hour of work,capital per hour of work will increase by one-third of a percent. 
D) the value of GDP is one-third the value of the capital stock. 
E) GDP is three times as large as the capital stock. 
A) for every 1 percent increase in capital per hour of work,GDP per hour of work will increase by one-third of a percent. 
B) for every 1 percent increase in capital per hour of work,GDP per hour of work will increase by 3 percent. 
C) for every 1 percent increase in GDP per hour of work,capital per hour of work will increase by one-third of a percent. 
D) the value of GDP is one-third the value of the capital stock. 
E) GDP is three times as large as the capital stock.

Question 16

Anything that causes the productivity curve to shift is classified as technological change.

Accepted Answer

A) True 
 B)False

Question 17

Explain why the discussion about the former Soviet Union illustrates the importance of providing adequate incentives to enable technological change.

Accepted Answer

If people do not have an incentive to in

Question 18

Most of the R&D funds in the United States are used to support pure science.

Accepted Answer

A) True 
 B)False

Question 19

Productivity continues to grow in the twenty-first century,and in particular it is spreading to countries like India and China.

Accepted Answer

A) True 
 B)False

Question 20

Suppose that in a given year there has been an increase in both technology and the amount of capital per hour worked.Diagram the consequence of these changes using a productivity function.

Accepted Answer

As shown in the figure below,the increas

Exam 21: Productivity and Economic Growth

What test should be performed to determine whether the government should engage in policies that affect economic growth?

Innovations apply only to new types of capital.

If the growth rate of technology is 3 percent over a given period of time and there has been no change in the amount of capital per hour worked,then,based on Solow's growth accounting formula,the growth rate of real GDP per hour of work will be

If output per hour grows by 4 percent and capital per hour of work grows by 6 percent,then,based on Solow's growth accounting formula,the growth rate of technology is

Explain why the contribution of capital per hour worked to the growth rate of real GDP is multiplied by one-third in the growth accounting formula.

Given the same amount of natural resources,which of the following conditions leads to a higher rate of economic growth?

According to economist Daron Acemoglu,well-functioning institutions are a fundamental cause of economic growth.

Which of the following statements is true about the period 1976-1995?

Suppose a worker at a computer company rearranges existing machines and labor and increases production in the process.Using the production function,with output on the vertical axis and labor on the horizontal axis,this would be described as

Requiring workers to work on weekends and holidays is an example of

Policies designed to improve education in grades K through 12 will result primarily in

Public radio is an example of a good that is

According to Solow's growth accounting formula,the growth rate of capital per hour of work is multiplied by one-third.This means that

Anything that causes the productivity curve to shift is classified as technological change.

Explain why the discussion about the former Soviet Union illustrates the importance of providing adequate incentives to enable technological change.

Most of the R&D funds in the United States are used to support pure science.

Productivity continues to grow in the twenty-first century,and in particular it is spreading to countries like India and China.

Suppose that in a given year there has been an increase in both technology and the amount of capital per hour worked.Diagram the consequence of these changes using a productivity function.

The Central Idea

Observing and Explaining the Economy

The Supply and Demand Model

Subtleties of the Supply and Demand Model: Price Floors,price Ceilings,and Elasticity

The Demand Curve and the Behavior of Consumers

The Supply Curve and the Behavior of Firms

The Interaction of People in Markets

Costs and the Changes at Firms Over Time

The Rise and Fall of Industries

Monopoly

Product Differentiation, monopolistic Competition, and Oligopoly

Antitrust Policy and Regulation

Labor Markets

Taxes, transfers, and Income Distribution

Public Goods, externalities, and Government Behavior

Capital and Financial Markets

Macroeconomics: the Big Picture

Measuring the Production, income, and Spending of Nations

The Spending Allocation Model

Unemployment and Employment

Money and Inflation

The Nature and Causes of Economic Fluctuations

The Economic Fluctuations Model

Using the Economic Fluctuations Model

Fiscal Policy

Monetary Policy

Economic Growth and Globalization

International Trade

International Finance

Reading,understanding,and Creating Graphs

Consumer Theory With Indifference Curves

Producer Theory With Isoquants

Present Discounted Value

The Miracle of Compound Growth

Deriving the Growth Accounting Formula

Deriving the Formula for the Keynesian Multiplier and the Forward-Looking Consumption Model

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