Deck 24: Deriving the Growth Accounting Formula

Question 1

Use the graph to answer the following questions. (A)Suppose that between two given years, growth in capital per hour of work and growth in technology were both positive. Pick two points on the graph that represent such a scenario.

(B)Suppose that between two given years, growth in capital per hour of work was zero, and growth in technology was positive. Pick two points on the graph that represent such a scenario.

(C)Suppose that between two given years, growth in capital per hour of work was positive, and growth in technology was negative. Pick two points on the graph that represent such a scenario. What happened to productivity in this particular case?

Answer 1

(A)From A to D.
(B)A to B or C to D.
(C)B to C. Productivity remained unchanged.

Question 2

In the formula , the term represents

A) the share of capital income in aggregate income.
B) the growth rate of output per hour worked that is due to the growth rate of technology.
C) the growth rate of output per hour worked that is due to the rate of growth of capital per hour worked.
D) the growth rate of capital per hour worked times the share of capital income in aggregate income.
E) the growth rate of technology.

Answer 2

the growth rate of capital per hour worked times the share of capital income in aggregate income.

Question 3

In the formula , the term r(K/Y) represents

A) the slope of the productivity function.
B) the share of capital income in aggregate income.
C) the investment share of GDP.
D) the increase in productivity due to a change in the capital stock.
E) the slope of the production function.

Answer 3

the share of capital income in aggregate income.

Question 4

Between 1975 and 1993, most of the increase in productivity in the United States was due to

A) increases in the amount of hours worked, which caused the production function to shift up.
B) increases in technology, which caused the productivity function to shift up.
C) the productivity function shifting because of growth in capital.
D) increases in capital per hour worked, which caused a movement along the productivity function.
E) increases in technology, which caused a movement along the productivity function.

Question 5

Suppose the production function Y = f(K,L) is such that . Plot the production function with Y on the vertical axis and L on the horizontal axis for the case where K = 500. Plot the productivity curve with Y/L on the vertical axis and K/L on the horizontal axis.

Question 6

According to the growth-accounting formula, productivity growth

A) can be a result of an upward shift and a rightward movement along the productivity curve.
B) can only be a result of a shift of the productivity curve.
C) can only be a result of a movement along the productivity curve.
D) only occurs when an upward shift of the productivity curve is offset by a leftward movement of that curve.
E) cannot be described by the productivity curve.

Question 7

Suppose in 2011 that real GDP of a country is $6 trillion, and the capital stock in real terms is $11 trillion. What is the slope of the productivity function?

Question 8

An increase in capital per hour of work results in

A) an upward shift of the productivity curve.
B) a downward shift of the productivity curve.
C) an upward and right movement along the productivity curve.
D) a downward and left movement along the productivity curve.
E) a clockwise rotation of the productivity curve.

Question 9

The growth rate of a variable is measured by

A) the amount the variable changes.
B) the change in the variable divided by the variable's new level.
C) the variable's new level divided by its initial level.
D) the change in the variable divided by the variable's initial level.
E) the variable's initial level divided by its new level.

Question 10

In the formula , the term represents

A) the change in capital per hour.
B) the growth rate of the labor force.
C) the growth rate of capital per hour.
D) the slope of the productivity function.
E) the increase in productivity.

Question 11

The growth rate of productivity due to an increase in capital income equals

A) the share of capital income in aggregate income.
B) the slope of the productivity function.
C) the growth rate of capital per hour worked times the share of capital income in aggregate income.
D) the growth rate of capital per hour worked.
E) the growth rate of technology.

Question 12

The productivity curve shifts upward as a result of

A) less technology.
B) more technology.
C) less capital.
D) more capital.
E) a higher population.

Question 13

The slope times the change along the horizontal axis gives

A) the change along the vertical axis.
B) the percentage change along the horizontal axis divided by the percentage change along the vertical axis.
C) the percentage change along the vertical axis.
D) the percentage change along the horizontal axis.
E) the percentage change along the vertical axis divided by the percentage change along the horizontal axis.