Problemset Self-Assessment Quiz

Title
Introductory
Text

Question 1 Economic development differs from economic growth in that

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the former refers to growth in economic Incorrect  
production and the latter relates to the
development of industry.
the former refers to improvements in living Incorrect  
standards but not the quality of life, and the
latter relates to growth in economic production.
the former refers to improvements in quality of Incorrect  
life but not living standards, and the latter relates
to growth in economic production.
the former refers to improvements in both living Correct  
standards and the quality of life, and the latter
relates to growth in economic production.

Question 2 Value added is ___________ for measuring ________. It is equal to the

_____________________________.
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secondary; production in the economy; value of Incorrect  
output minus the value of inputs
the basis; production in the economy; value of Correct  
output minus the value of inputs
secondary; production in the economy; value of Incorrect  
input minus the value of output
the basis; production in the manufacturing sector Incorrect  
only; value of output minus the value of inputs
Question 3 Factor abundance is defined as the
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relative availability of the different factors of Correct  
production. Highly developed countries are
relatively more capital-abundant with respect to
labor than developing countries are.
absolute availability of the different factors of Incorrect  
production. Highly developed countries are
relatively more capital-abundant with respect to
labor than developing countries are.
relative availability of the different factors of Incorrect  
production. Highly developed countries are
relatively more labor-abundant with respect to
capital than developing countries are.
absolute availability of the different factors of Incorrect  
production. Highly developed countries are
relatively more labor-abundant with respect to
capital than developing countries are.

Question 4 The Cobb-Douglas production function is useful for the following

reasons:
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It models the additive characteristic of capital Incorrect  
and labor.
It provides expressions for the returns of capital Incorrect  
and labor, and for their contribution to the
growth process.
It is a good approximation of the relationship Incorrect  
between the factors of production and output at
the macroeconomic level.
All of the above are correct. Correct  
Question 5 Average and marginal productivity are determined respectively as
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the ratio of the marginal product over the Incorrect  
average number of workers and the ratio of the
marginal product over the total number of
workers.
the ratio of national output over employment and Correct  
the change in output resulting from a change in
the units of labor.
the change in output resulting from a change in Incorrect  
the units of labor and the ratio of national output
over employment.
None of the above. Incorrect  

Question 6 The cross derivative of the production function refers to how

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the marginal product of labor increases when Incorrect  
there is more capital.
the marginal product of labor increases when Incorrect  
there is less capital.
the marginal product of capital increases when Incorrect  
there is more labor.
a. and c. are correct. Correct  

Question 7 In growth accounting, total factor productivity refers to the

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part of total output explained by labor added to Incorrect  
the part of output explained by capital.
part of total output explained by changes in the Incorrect  
total factor endowment.
part of total output explained neither by labor Correct  
and nor by capital.
part of output explained by all factors but Incorrect  
entrepreneurship.

Question 8 Let Country Z’s growth in a decade be 15%, if capital grew by 20%,
labor grew at a rate of 3%, and if the share of labor is 40%, total-factor-
Type: productivity growth is equal to:
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5.8. Incorrect  
3.5. Incorrect  
1.8. Correct  
0.018. Incorrect  

Question 9 The assumption of constant returns to scale is key in the Neoclassical

Solow Growth model to explain the crucial role of
Type: Hint:  
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labor accumulation in explaining capital Incorrect  
productivity.
capital accumulation in explaining total factor Incorrect  
productivity.
labor accumulation in explaining total factor Incorrect  
productivity.
capital accumulation in explaining labor Correct  
productivity.
Question 10 Period-by-period increases in capital intensity get __________ the
closer the economy is to the steady state. Thus, growth is greater, the
Type: ____________ the economy is from k*.
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smaller; closer Incorrect  
larger; farther Incorrect  
smaller; farther Correct  
larger; closer Incorrect  

Question 11 Since population growth is _________ income growth in the steady

state, ___________ is the only variable that affects the growth of the
Type: economy in the steady state.
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greater than; income growth Incorrect  
smaller than; income growth Incorrect  
equal to; population growth Correct  
equal to; income growth Incorrect  

Question 12 Higher saving rates can translate into greater economic growth if
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the interest rates on savings are high. Incorrect  
people borrow to invest. Incorrect  
the allocation of investment is efficient. Correct  
the country’s system is based on central Incorrect  
planning.
Question 13 The Solow models predicts convergence that refers to the fact that
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countries that start with a higher per worker Incorrect  
income grow faster.
countries that start with a lower per worker Incorrect  
income grow slower.
countries that start with a higher per worker Incorrect  
income do not grow further.
countries that start with a lower per worker Correct  
income grow faster.

Question 14 Endogenous growth does allow for

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technological change. Incorrect  
the almost absent role of serious ecological Incorrect  
problems.
consideration of the use of renewable resources. Incorrect  
a. and c. are correct. Correct  

Question 15 Knowledge is crucial in the context of endogenous growth theory. It is

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rival and independent of the previous pool of Incorrect  
knowledge.
rival and dependent of the previous pool of Incorrect  
knowledge.
 non-rival and independent of the previous pool Incorrect  
of knowledge.
non-rival and dependent of the previous pool of Correct  
knowledge.

Question 16 The Solow model and the Endogenous Growth model assume
_________________ and ______________, respectively.
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imperfect competition; perfect competition Incorrect  
perfect competition; imperfect competition Correct  
monopolistic competition; perfect competition Incorrect  
perfect competition; monopolistic competition Incorrect  

Question 17 The Romer model predicts

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divergence based on the developed countries’ Incorrect  
higher pool of knowledge.
no catching up for developing countries due to Incorrect  
the fact that their pool of knowledge is smaller.
convergence based on the developed countries’ Incorrect  
higher pool of knowledge.
a. and b. are correct. Correct  

Question 18 The existence and enforcement of intellectual property rights is

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 beneficial to less-developed countries as they Incorrect  
see less technology transfer take place from
developed countries.
detrimental to less-developed countries as they Correct  
see less technology transfer take place from
developed countries.
indifferent to less-developed countries as it Incorrect  
affects their adoption of ideas from abroad.
None of the above is correct. Incorrect  

Question 19 Differences in total factor productivity are given by

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technology and natural endowments of the Incorrect  
countries.
skills of the labor force. Incorrect  
the growth of population. Incorrect  
geography and institutions. Correct  

Question 20 Acemoglu, Johnson, and Robinson were able to prove

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causation between institutions and economic Correct  
growth.
association between institutions and economic Incorrect  
growth.
no relationship exists between institutions and Incorrect  
economic growth.
causation between risk and economic growth. Incorrect