Exam

Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
Use the information below to answer the following questions

(1) the rate of depreciation is 12% per year,

(2) the population growth rate is 2% per year, and
(3) the growth rate of technology is 3% per year.

1)
Which of the following represents the steady-state growth rate of output in this economy?

1)

_______
A)
2%

B)

3%

C)

5%

D)

12%

E)

17%

2)
The rate of growth of output per worker in the United States between 1950 and 1973 was approximately equal to which of
the following?

2)

_______
A)
6.7%

B)

5.7%

C)
2.7%

D)

1.7%

3)
Assume the production function is represented by the following Y = f(K, NA). Given this production function and the
constant returns to scale assumption, output will increase by 5% when which of the following occurs?

3)

_______
A)
N or A increase by 5%
B)
K and N increase by 5%
C)
N and A increase by 5%
D)
K or NA increase by 5%
E)
all of the above

4)
Assume that an economy experiences both positive population growth and technological progress. Once the economy has
achieved balanced growth, we know that growth rate of K/NA is

4)

_______
A)
0.
B)
gA gN.
C)
gA.
D)
gA + gN.
E)
none of the above

5)
Which of the following best describes a situation where research is considered relatively fertile?
5)

_______
A)
research that translates into many new products
B)
research that cannot be easily copied by other firms
C)
research that costs the firms relatively little money
D)
all of the above
E)
none of the above

6)
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 ratio (K/NA) is

6)

_______
A)
growing at a rate of gN.
B)
growing at a rate of gA.
C)
growing at a rate of gA + gN.
D)
growing at a rate of + gA + gN.
E)
none of the above

7)
High growth in the rich countries from 1950 to 1973 was most likely due to

7)

_______
A)
the destruction of capital during World War II.
B)
high capital accumulation.
C)
a high savings rate.
D)
high population growth.
E)
none of the above

8)
When was the last year that GDP per capita in North Korea was approximately equal to GDP per capita in South Korea?

8)

_______
A)
1950
B)
1970
C)
1990
D)
2000
E)
none of the above

9)
Research suggest that the relatively higher rate of growth of output per capita between 1950 and 1973 was the result of
which of the following?

9)

_______
A)
an increase in the rate of technological progress
B)
an increase in the rate of growth of N
C)
an increase in K/NA
D)
a reduction in the saving rate
E)
an increase in the saving rate

Use the following information answer the questions below

= .11
gA = .03
gN = .02
 10)
Which of the following represents the amount of investment per effective worker needed to maintain a constant level of
capital per effective worker (K/NA)?

10)

______
A)
.02(K/NA)
B)
.03(K/NA)
C)
.05(K/NA)
D)
.13(K/NA)
E)
.16(K/NA)

11)
Assume that a fiscal policy action results in a reduction in the saving rate. This reduction in the saving rate will cause a
reduction in which of the following to occur once the economy reaches its new steady state equilibrium?

11)

______
A)
growth rate of capital per worker
B)
growth rate of capital
C)
growth rate of output
D)
all of the above
E)
none of the above

12)
Assume that an economy experiences both positive population growth and technological progress. A reduction in the
saving rate will cause

12)

______
A)
no change in Y/NA.
B)
no change in K/NA.
 C)
a permanent reduction in the rate of growth of output.
D)
a permanent reduction in the rate of growth of output per worker.
E)
none of the above

13)
Convergence of output per capita across countries has come from

13)

______
A)
higher technological progress from the countries that started behind.
B)
a convergence of the accumulation of capital.
C)
a convergence of saving rates.
D)
all of the above

14)
Assume that an economy experiences both positive population growth and technological progress. Once the economy has
achieved balanced growth, we know that output (Y) is

14)

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

15)
For this question, assume the production function is represented by the following Y = f(K, NA). Now, suppose the
variable, A, increases by 5%. This implies that which of the following variables will also increase by 5%?
15)

______
A)
effective labor
B)
labor
C)
output
D)
all of the above
E)
none of the above

16)
Since 1973, the rate of growth of output per capita has declined for a number of countries. Analysis of the data suggests
that this slowdown has been caused by

16)

______
A)
a reduction in the rate of growth of N.
B)
a reduction in the rate of technological progress.
C)
a reduction in the saving rate.
D)
a reduction in the accumulation of capital.

17)
The evidence shows that, over the last 25 years, spending on research and development in the rich countries has

17)

______
A)
increased in absolute numbers, but decreased as a percentage of GDP.
B)
decreased dramatically.
C)
remained constant.
D)
decreased slightly.
E)
increased as a percentage of GDP.
 18)
Suppose output per worker in a country has grown at the same rate as technology over for many years. This country's
growth would be described as

18)

______
A)
"diffuse" growth.
B)
"balanced" growth.
C)
"appropriable" growth.
D)
"effective" growth.
E)
none of the above

19)
Which of the following represents the fertility of research?

19)

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

Use the information below to answer the following questions

(1) the rate of depreciation is 12% per year,

(2) the population growth rate is 2% per year, and
(3) the growth rate of technology is 3% per year.

20)
Which of the following represents the level of investment needed to maintain a constant capital stock (K) in this economy?
20)

______
A)
.02K

B)

.03K

C)

.05K

D)

.12K

E)

.17K

21)
Assume that an economy experiences both positive population growth and technological progress. Once the economy has
achieved balanced growth, we know that the capital stock is

21)

______
A)
growing at a rate of gA.
B)
growing at a rate of gN.
C)
growing at a rate of gA + gN.
D)
constant.
E)
none of the above

22)
Patents represent

22)

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

23)
Which of the following will cause a reduction in the steady-state growth rate of capital?

23)

______
A)
a reduction in the population growth rate
B)
a temporary reduction in technological progress
C)
a reduction in the saving rate
D)
all of the above
E)
none of the above

24)
Let a represent labor's share of total output. The Solow residual is represented by

24)

______
A)
1/(1-).
B)
gy.
C)
gN.
D)
gK.
E)
gy - [gN + (1 - )gK].

Use the following information answer the questions below

 = .11
gA = .03
gN = .02

25)
Given this information, we know that effective labor (NA) grows at which rate?

25)

______
A)
0

B)

1%

C)

4%

D)

5%

E)

15%

Use the information below to answer the following questions

(1) the rate of depreciation is 12% per year,

(2) the population growth rate is 2% per year, and
(3) the growth rate of technology is 3% per year.

26)
Which of the following represents the steady-state growth rate of output per worker in this economy?

26)

______
A)
2%

B)

3%

C)
5%

D)

12%

E)

17%

27)
Among the reasons that the poor countries have been unable to close the "technology gap" with the rich countries is

27)

______
A)
low education levels.
B)
poorly established property rights.
C)
poorly developed financial markets.
D)
all of the above
E)
none of the above

28)
Which of the following represents the appropriability of research?

28)

______
A)
the protection given to new products by the law
B)
how R&D spending translates into new ideas
C)
the extent to which firms benefit from the results of their own R&D spending
D)
the rate of technological progress
E)
both B and C
Use the following information answer the questions below

= .11
gA = .03
gN = .02

29)
Given this information, the steady state rate of growth of Y/NA is

29)

______
A)
0.

B)

2%.

C)

3%.

D)

5%.

E)

16%.

30)
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 worker ratio (K/N) is

30)

______
A)
constant.
B)
growing at the same rate as Y/N.
C)
growing at a rate of gA.
D)
growing at a rate of gN.
E)
growing at a rate of gA - gN.
 1)

2)
A

3)
B

4)
A

5)
A

6)
D

7)
E

8)
B

9)
A

10)
E

11)
E

12)
E
 13)
A

14)
A

15)
A

16)
B

17)
E

18)
B

19)
B

20)
C

21)
C

22)
A

23)
A

24)
E

25)
D
 26)
A

27)
D

28)
C

29)
A

30)
B