Question 1

Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that the capital per effective worker (K/AN) is

Accepted Answer

A)   growing at a rate of 6 + gA + gN.
B)   growing at a rate of zero.
C)   growing at a rate of gA + gN.
D)   growing at a rate of gA.
E)   growing at a rate of gN. B

Question 2

Refer to the information above. Which of the following represents the level of investment needed to maintain constant capital per effective worker (K/AN) in this economy?

Accepted Answer

A)   0.05K.
B)   0.08K.
C)   0.12K.
D)   0.31K.
E)   0.23K. E

Question 3

Assume the production function is represented by Y = F (K, AN) and the number of workers is constant. Now suppose the state of technology variable, A, increases by 6%. This implies that which of the following variables will also increase by 6%?

Accepted Answer

A)   Effective labour.
B)   Capital.
C)   Output.
D)   All of the above.
E)   None of the above. D

Question 4

Assume that a fiscal policy action results in a decrease in the saving rate. This decrease in the saving rate will cause a decrease in which of the following once the economy reaches its new steady state equilibrium?

Accepted Answer

A)   The growth rate of output.
B)   The growth rate of capital per worker.
C)   The growth rate of capital.
D)   All of the above.
E)   None of the above.

Question 5

Which of the following best describes a situation where research is considered appropriable?

Accepted Answer

A)   Research that translates into many new products.
B)   Research that is easily copied by another firm.
C)   Research that is well suited to its commercial purpose.
D)   All of the above.
E)   None of the above.

Question 6

Graphically illustrate and explain the effects of an increase in the rate of technological progress on the Solow- Swan growth model. In your answer, you must clearly label all curves and the initial and final equilibria. In your answer, explain what happens to the rate of growth of output per worker and the rate of growth of output as the economy adjusts to this event.

Accepted Answer

The answer of Graphically illustrate and explain the effects of...

Question 7

Patent protection is important in affecting technological progress because it makes research and development:

Accepted Answer

A)   more easily available.
B)   diffuse more quickly.
C)   more fertile.
D)   environmentally responsible.
E)   more appropriable.

Question 8

Suppose output per worker in a country has grown at the same rate as technology for over many years. This country's growth would be described as:

Accepted Answer

A)   "effective" growth.
B)   "optimal" growth.
C)   "balanced" growth.
D)   "diffuse" growth.
E)   "appropriable" growth.

Question 9

Discuss the relative strengths of capital accumulation and technological progress in contributing to output growth rates in Australia during 1985- 2009. What are the long- run implications?

Accepted Answer

The answer of Discuss the relative strengths of capital accumulation...

Question 10

Refer to the information above. Which of the following represents the level of investment needed to maintain a constant capital stock (K) in this economy?

Accepted Answer

A)   0.08K /AN.
B)   0.05K/ AN.
C)   0.31K /AN.
D)   0.23K /AN.
E)   0.12K /AN.

Question 11

Refer to the information above. Which of the following represents the steady- state growth rate of output per worker in this economy?

Accepted Answer

A)   12%.
B)   2%.
C)   3%.
D)   5%.
E)   18%.

Question 12

Which of the following represents the fertility of research?

Accepted Answer

A)   The extent to which firms benefit from the results of their own R&D spending.
B)   The protection given to new products by the law.
C)   The rate of technological progress.
D)   How R&D spending translates into new ideas.
E)   Both A and C.

Question 13

Let a represent labour's share of total output. Economic growth attributable to labour growth is represented by:

Accepted Answer

A)   agA.
B)   1/a.
C)   agk.
D)   agN.
E)   agy.

Question 14

Use the following information to answer the question(s) below:
6 = 0.13
gA = 0.05
gN = 0.04
-Given the information above, the steady state rate of growth of Y/AN is:

Accepted Answer

A)   5%.
B)   9%.
C)   22%.
D)   4%.
E)   0%.

Question 15

Assume that an economy experiences both positive population growth and technological progress. In this economy, which of the following is constant when balanced growth is achieved?

Accepted Answer

A)   AN.
B)   Y.
C)   K/N.
D)   Y/AN.
E)   K.

Question 16

The method of constructing a measure of technological progress relies on which of the following assumptions?

Accepted Answer

A)   The investment rate does not change.
B)   Population growth is zero.
C)   Each factor of production is paid its marginal product.
D)   Population growth does not change.
E)   The saving rate does not change.

Question 17

Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that the output per worker (Y/N) is

Accepted Answer

A)   growing at a rate of gA - gN.
B)   growing at a rate of 6 + gA + gN.
C)   growing at a rate of gN.
D)   growing at a rate of gA.
E)   constant.

Question 18

Which of the following best describes a situation where research is considered relatively fertile?

Accepted Answer

A)   Research that costs the firms relatively little money.
B)   Research that translates into many new products.
C)   Research that has direct applications in the field of agriculture.
D)   Research that cannot be easily copied by other firms.
E)   Research that can be easily understood, even by those with little technical background.

Question 19

Explain what factors determine the slope of the required investment line.

Accepted Answer

The answer of Explain what factors determine the slope of...

Question 20

Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that:

Accepted Answer

A)   I/AN = (6)  K/AN.
B)   I = gNK.
C)   I = 6K.
D)   I/AN = (gA + gN)  K/AN.
E)   I/AN = (6 + gA + gN)  K/AN.

Exam 12: Technological Progress and Growth