Question 1

Suppose the parameters of the Romer model take the following values:    
And  
What is the per capita income of this country in the first period, y1?

Accepted Answer

A)  about 1.19 
B)  about 11.9 
C)  about 12.0 
D)  about 14.3 
E)  about 9.9 
A)  about 1.19 
B)  about 11.9 
C)  about 12.0 
D)  about 14.3 
E)  about 9.9 B

Question 2

In the knowledge production function   represents:

Accepted Answer

A)  natural resources. 
B)  the cost of producing new ideas. 
C)  the marginal cost of labor. 
D)  how good an economy is at generating knowledge. 
E)  labor's wage. 
A)  natural resources. 
B)  the cost of producing new ideas. 
C)  the marginal cost of labor. 
D)  how good an economy is at generating knowledge. 
E)  labor's wage. D

Question 3

An example of open source software is:

Accepted Answer

A)  Linux. 
B)  Mountain Lion. 
C)  Win32. 
D)  Red Hat. 
E)  Hummingbird. 
A)  Linux. 
B)  Mountain Lion. 
C)  Win32. 
D)  Red Hat. 
E)  Hummingbird. A

Question 4

In the combined Solow-Romer model, an exogenous increase in the saving rate:

Accepted Answer

A)  immediately increases the growth rate of per capita output, which eventually slows to its previous rate. 
B)  immediately decreases the per capita output, but the growth rate does not change. 
C)  increases the growth rate of per capita income, but eventually the economy reaches a new steady-state level of per capita output. 
D)  immediately decreases the growth rate of per capita output, which eventually accelerates to a higher rate. 
E)  has no impact on the growth rate or level of per capita output. 
A)  immediately increases the growth rate of per capita output, which eventually slows to its previous rate. 
B)  immediately decreases the per capita output, but the growth rate does not change. 
C)  increases the growth rate of per capita income, but eventually the economy reaches a new steady-state level of per capita output. 
D)  immediately decreases the growth rate of per capita output, which eventually accelerates to a higher rate. 
E)  has no impact on the growth rate or level of per capita output.

Question 5

The reason that economic growth in Luxembourg is greater than the growth rate in the United States is:

Accepted Answer

A)  that Luxembourg has more researchers. 
B)  the globalization of ideas. 
C)  that it has a higher level of capital stock. 
D)  that there are more resources in the United States and diminishing returns to natural resources. 
E)  that the capital depreciation rate is higher in the United States. 
A)  that Luxembourg has more researchers. 
B)  the globalization of ideas. 
C)  that it has a higher level of capital stock. 
D)  that there are more resources in the United States and diminishing returns to natural resources. 
E)  that the capital depreciation rate is higher in the United States.

Question 6

Because there are no diminishing returns in the stock of ideas in the Romer model:

Accepted Answer

A)  old ideas continue to contribute to current economic growth. 
B)  economic growth cannot be sustained forever. 
C)  the economy eventually reaches a steady state. 
D)  economic growth eventually slows. 
E)  new ideas must be continually created. 
A)  old ideas continue to contribute to current economic growth. 
B)  economic growth cannot be sustained forever. 
C)  the economy eventually reaches a steady state. 
D)  economic growth eventually slows. 
E)  new ideas must be continually created.

Question 7

What might be an explanation for the production of open source, free software?

Accepted Answer

A)  marginal cost at zero 
B)  increasing returns 
C)  diminishing marginal utility 
D)  moral hazard 
E)  altruism 
A)  marginal cost at zero 
B)  increasing returns 
C)  diminishing marginal utility 
D)  moral hazard 
E)  altruism

Question 8

How does the Romer model of economic growth exploit the concept of nonrivalry?

Accepted Answer

In the Romer model, new ideas are "publi

Question 9

A balanced growth path is defined as a situation in which the:

Accepted Answer

A)  output growth rate is zero. 
B)  growth rates of all endogenous variables are variable. 
C)  growth rates of some of the endogenous variables are constant. 
D)  growth rates of all endogenous variables are constant. 
E)  All of these answers are correct. 
A)  output growth rate is zero. 
B)  growth rates of all endogenous variables are variable. 
C)  growth rates of some of the endogenous variables are constant. 
D)  growth rates of all endogenous variables are constant. 
E)  All of these answers are correct.

Question 10

Offering inventors a prize is a way of providing an incentive to generate new ideas.

Accepted Answer

A) True 
 B)False

Question 11

For the years 1995-2007, if output per person in the private sector grew 2.7 percent, capital intensity grew 1.1 percent, and labor composition grew 0.2 percent, what was the growth rate of total factor productivity?

Accepted Answer

A)  3.6 percent 
B)  1.8 percent 
C)  1.4 percent 
D)  4.0 percent 
E)  2.3 percent 
A)  3.6 percent 
B)  1.8 percent 
C)  1.4 percent 
D)  4.0 percent 
E)  2.3 percent

Question 12

In Romer's influential paper he divided the economic world into:

Accepted Answer

A)  resources and ideas. 
B)  objects and resources. 
C)  objects and ideas. 
D)  utilities and objects. 
E)  None of these answers is correct. 
A)  resources and ideas. 
B)  objects and resources. 
C)  objects and ideas. 
D)  utilities and objects. 
E)  None of these answers is correct.

Question 13

In the growth accounting equation,    
, B represents ________, while C is called ________.

Accepted Answer

A)  labor composition; capital accumulation 
B)  the contribution from capital; the (Solow) residual 
C)  labor composition; the (Solow) residual 
D)  educational attainment; labor composition 
E)  None of these answers is correct. 
A)  labor composition; capital accumulation 
B)  the contribution from capital; the (Solow) residual 
C)  labor composition; the (Solow) residual 
D)  educational attainment; labor composition 
E)  None of these answers is correct.

Question 14

The number of ideas is finite.

Accepted Answer

A) True 
 B)False

Question 15

In the Romer model, what are the two key outputs produced?

Accepted Answer

A)  a government good and new ideas 
B)  a consumption good and new ideas 
C)  a consumption good and total factor productivity 
D)  a consumption good and capital 
E)  None of these answers is correct. 
A)  a government good and new ideas 
B)  a consumption good and new ideas 
C)  a consumption good and total factor productivity 
D)  a consumption good and capital 
E)  None of these answers is correct.

Question 16

In the combined Solow-Romer model, the total output growth rate is greater than in the Romer model because:

Accepted Answer

A)  the saving rate is higher. 
B)  of population growth. 
C)  capital depreciation is zero. 
D)  of capital accumulation. 
E)  of a greater research share. 
A)  the saving rate is higher. 
B)  of population growth. 
C)  capital depreciation is zero. 
D)  of capital accumulation. 
E)  of a greater research share.

Question 17

Consider the Romer model. If the percentage of the population engaged in ideas formation,   , decreases, what are the short- and long-term impacts of this shift?

Accepted Answer

This is the opposite of Figure 6.4 "in t

Question 18

In the Romer model, the growth rate of knowledge is given by:

Accepted Answer

A)    . 
B)    . 
C)    . 
D)    . 
E)    . 
A)    . 
B)    . 
C)    . 
D)    . 
E)    .

Question 19

In the combined Solow-Romer model, the growth rate of total output, using the standard production function, is given as   
.

Accepted Answer

A) True 
 B)False

Question 20

For the years 2011-2015, if output per person in the private sector grew 1.9 percent, capital intensity grew 1.1 percent, and total factor productivity grew 0.2 percent, what was the growth rate of labor composition?

Accepted Answer

A)  0.6 percent 
B)  2.6 percent 
C)  3.4 percent 
D)  1.2 percent 
E)  1.3 percent 
A)  0.6 percent 
B)  2.6 percent 
C)  3.4 percent 
D)  1.2 percent 
E)  1.3 percent

Exam 6: Growth and Ideas

Suppose the parameters of the Romer model take the following values: And What is the per capita income of this country in the first period, y1?

In the knowledge production function represents:

An example of open source software is:

In the combined Solow-Romer model, an exogenous increase in the saving rate:

The reason that economic growth in Luxembourg is greater than the growth rate in the United States is:

Because there are no diminishing returns in the stock of ideas in the Romer model:

What might be an explanation for the production of open source, free software?

How does the Romer model of economic growth exploit the concept of nonrivalry?

A balanced growth path is defined as a situation in which the:

Offering inventors a prize is a way of providing an incentive to generate new ideas.

For the years 1995-2007, if output per person in the private sector grew 2.7 percent, capital intensity grew 1.1 percent, and labor composition grew 0.2 percent, what was the growth rate of total factor productivity?

In Romer's influential paper he divided the economic world into:

In the growth accounting equation, , B represents ________, while C is called ________.

The number of ideas is finite.

In the Romer model, what are the two key outputs produced?

In the combined Solow-Romer model, the total output growth rate is greater than in the Romer model because:

Consider the Romer model. If the percentage of the population engaged in ideas formation, , decreases, what are the short- and long-term impacts of this shift?

In the Romer model, the growth rate of knowledge is given by:

In the combined Solow-Romer model, the growth rate of total output, using the standard production function, is given as .

For the years 2011-2015, if output per person in the private sector grew 1.9 percent, capital intensity grew 1.1 percent, and total factor productivity grew 0.2 percent, what was the growth rate of labor composition?

Introduction to Macroeconomics

Measuring the Macroeconomy

An Overview of Long-Run Economic Growth

A Model of Production

The Solow Growth Model

The Labor Market, Wages, and Unemployment

Inflation

An Introduction to the Short Run

The Great Recession: a First Look

The Is Curve

Monetary Policy and the Phillips Curve

Stabilization Policy and the Asad Framework

The Great Recession and the Short-Run Model

Dsge Models: the Frontier of Business Cycle Research

Consumption

Investment

The Government and the Macroeconomy

International Trade

Exchange Rates and International Finance

Parting Thoughts

Filters

Suppose the parameters of the Romer model take the following values: And What is the per capita income of this country in the first period, y₁?

In the growth accounting equation, , B represents , while C is called .