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CHAPTER 6: Growth and Ideas

MULTIPLE CHOICE

1. In Romer’s influential paper he divided the economic world into:

a. resources and ideas. d. utilities and objects.
b. objects and resources. e. None of these answers is correct.
c. objects and ideas.
ANS: C DIF: Easy REF: 6.1 TOP: I.
MSC: Remembering

2. Which of the following is an example of an idea?

a. new irrigation techniques d. the steam engine
b. turning sand into computer chips e. All of these answers are correct.
c. the assembly line
ANS: E DIF: Moderate REF: 6.1 TOP: I.
MSC: Evaluating

3. Which of the following flowcharts best summarizes Romer’s description of ideas and growth?
a. Ideas → Nonrivalry → Increasing returns → Imperfect competition
b. Ideas → Capital → Constant returns → Imperfect competition
c. Capital → Rivalry → Increasing returns → Perfect competition
d. Ideas → Rivalry → Increasing returns → Perfect competition
e. Capital → Nonrivalry → Decreasing returns → Imperfect competition
ANS: A DIF: Easy REF: 6.2 TOP: II.
MSC: Understanding

4. According to the text, there are approximately ________ different coherent paragraphs written
with 100 words or less in the English language.
a. 1020,000 d. 10430
b. 20,000 e. 4  1077
c. 10330
ANS: D DIF: Easy REF: 6.2 TOP: II.
MSC: Understanding

5. The amount of raw material in the universe—the amount of sand, oil, and the number of atoms of
carbon, oxygen, and so on—is ________. The number of ways of arranging and using these raw
materials is ________.
a. finite; also finite d. virtually infinite; zero
b. infinite; virtually infinite e. zero; infinite
c. finite; virtually infinite
ANS: C DIF: Easy REF: 6.2 TOP: II.A.
MSC: Remembering

6. In economics, a rival good is one that:

a. cannot be consumed by more than two people at a time.
b. can be consumed by more than one person at a time.
c. is congested if used by more than one person at a time.
d. cannot be consumed by more than one person at a time.
 e. None of these answers is correct.
ANS: D DIF: Easy REF: 6.2 TOP: II.B.
MSC: Understanding

7. In economics, a nonrival good is one that:

a. cannot be consumed by more than one person at a time.
b. can be consumed by more than one person at a time.
c. can be consumed by more than one person at a time but is congested.
d. cannot be consumed by more than two people at a time.
e. None of these answers is correct.
ANS: B DIF: Easy REF: 6.2 TOP: II.B.
MSC: Understanding

8. Which of the following is a nonrival good?

a. a peanut butter sandwich d. All of these answers are correct.
b. orange juice e. None of these answers is correct.
c. a jacket
ANS: E DIF: Easy REF: 6.2 TOP: II.B.
MSC: Analyzing

9. Which of the following is a nonrival good?

a. a TV signal d. a dam
b. a blueprint e. All of these answers are correct.
c. national defense
ANS: E DIF: Easy REF: 6.2 TOP: II.B.
MSC: Analyzing

10. If there are large fixed or research and development costs, such as in the pharmaceutical industry,
production can be characterized by:
a. negative costs. d. large variable costs.
b. constant returns to scale. e. increasing returns to scale.
c. decreasing returns to scale.
ANS: E DIF: Moderate REF: 6.2 TOP: II.C.
MSC: Understanding

11. If Y is a good’s output, X is spending to produce a good, is the fixed cost associated with
production, and C is the average cost of production, which of the following production functions
exhibits increasing returns?
a. d.
b. e.
c.

ANS: D DIF: Moderate REF: 6.2 TOP: II.C.

MSC: Analyzing

12. Increasing returns to scale is characterized by:

a. constantly declining fixed costs.
b. diseconomies of scale; that is, the average cost falls as output rises.
c. economies of scale; that is, the average cost rises as output rises.
d. diseconomies of scale; that is, the average cost is constant as output rises.
 e. economies of scale; that is, the average cost falls as output rises.
ANS: E DIF: Moderate REF: 6.2 TOP: II.C.
MSC: Understanding

13. To get increasing returns to scale using the production function , we need to
replace total factor productivity with:
a. more capital. d. the number 2.
b. the flow of ideas, At. e. twice the factor productivity, .
c. the stock of ideas, At.
ANS: C DIF: Moderate REF: 6.2 TOP: II.C.
MSC: Understanding

14. With the production function , if we double ________, we have an increasing

returns production.
a. capital d. capital, labor, and the stock of ideas
b. capital and the stock of ideas e. labor and the stock of ideas
c. capital and labor
ANS: D DIF: Moderate REF: 6.2 TOP: II.C.
MSC: Analyzing

15. With the production function , if we double ________, we have a constant returns
production.
a. capital d. capital and labor
b. capital, labor, and the stock of ideas e. labor and the stock of ideas
c. capital and the stock of ideas
ANS: D DIF: Moderate REF: 6.2 TOP: II.C.
MSC: Analyzing

16. The production function , where At is the stock of ideas, Kt is capital, and Lt is
labor, assumes:
a. At is rivalrous. d. Lt is rivalrous.
b. At is nonrivalrous. e. At is fixed.
c. Kt is nonrivalrous.
ANS: B DIF: Moderate REF: 6.2 TOP: II.C.
MSC: Understanding

17. The difference between total factor productivity (TFP) in the Solow model and the stock of ideas
in the Romer model is that:
a. TFP grows and ideas are fixed. d. TFP is rivalrous and ideas are not.
b. TFP is fixed and ideas can grow. e. There is no difference.
c. TFP is nonrivalrous and ideas are not.
ANS: B DIF: Moderate REF: 6.2 TOP: II.C.
MSC: Evaluating

18. If there are large fixed costs due to research and development, perfect competition does not
generate new ideas because:
a. firms need to recoup these costs through higher profits.
 b. with monopolistic competition, prices are equal to the marginal cost.
c. with monopolistic competition, prices are equal to the marginal cost minus a markup.
d. perfectly competitive firms always set prices lower than the marginal cost.
e. the government does not adequately fund innovation.
ANS: A DIF: Easy REF: 6.2 TOP: II.D.
MSC: Understanding

19. Because in many industries the cost of generating new ideas is so high, firms must charge a price
________ cost.
a. equal to the marginal d. equal to the average fixed
b. higher than the marginal e. lower than the average fixed
c. lower than the marginal
ANS: B DIF: Easy REF: 6.2 TOP: II.D.
MSC: Understanding

20. In perfect competition, the price is ________; in a monopoly, the price is ________.
a. zero; positive
b. greater than the marginal cost; equal to the marginal cost
c. less than the marginal cost; greater than the marginal cost
d. equal to the marginal cost; greater than the marginal cost
e. positive; zero
ANS: D DIF: Easy REF: 6.2 TOP: II.D.
MSC: Understanding

21. Because of fixed R&D costs, ________ are needed to generate ________.
a. profits; capital d. variable costs; total factor productivity
b. costs; capital e. profits; total factor productivity
c. profits; new ideas
ANS: C DIF: Easy REF: 6.2 TOP: II.D.
MSC: Evaluating

22. The reason perfect competition cannot generate new ideas is that:
a. profits are positive.
b. perfectly competitive firms have no ideas.
c. profits are zero.
d. firms are too small to generate ideas.
e. revenues are positive.
ANS: C DIF: Easy REF: 6.2 TOP: II.D.
MSC: Evaluating

23. Which of the following can be used to give firms incentive to innovate?
a. patents d. lower taxes
b. copyrights e. All of these answers are correct.
c. trade secrets
ANS: E DIF: Easy REF: 6.2 TOP: II.D.
MSC: Evaluating

24. Which of the following can be used to give firms incentive to innovate?
a. patents d. subsidies
b. copyrights e. All of these answers are correct.
 c. prizes
ANS: E DIF: Easy REF: 6.2 TOP: II.D.
MSC: Evaluating

25. The president of Tunisia asks you to suggest an idea to improve the economy’s growth without
worrying about decreasing returns. You suggest:
a. paying a competitive wage.
b. offering firms an incentive to produce new ideas.
c. placing a higher tax on firms.
d. removing legal protection for firms.
e. None of these answers is correct.
ANS: B DIF: Moderate REF: 6.2 TOP: II.D.
MSC: Evaluating

26. An allocation that is ________ exists if there is no way to change a resource allocation that makes
someone worse off when allocating more to another.
a. Hotelling competitive d. Kuhn-Tucker conditional
b. Fama efficient e. Arrow impossible
c. Pareto optimal
ANS: C DIF: Easy REF: 6.2 TOP: II.D.
MSC: Remembering

27. An example of open source software is:

a. Linux. d. Red Hat.
b. Mountain Lion. e. Hummingbird.
c. Win32.
ANS: A DIF: Easy REF: 6.2 TOP: II.E.
MSC: Understanding

28. What might be an explanation for the production of open source, free software?
a. marginal cost at zero d. moral hazard
b. increasing returns e. altruism
c. diminishing marginal utility
ANS: E DIF: Easy REF: 6.2 TOP: II.E.
MSC: Understanding

29. In 1994, the ________ passed the ________ to ________.

a. World Trade Organization; Trade-Related Aspects of Intellectual Property Rights; protect
intellectual property rights
b. Bretton Woods System; General Agreement on Tariffs and Trade; promote free trade
c. United Nations; United Nations Conference on Trade and Development; reduce trade
barriers
d. United States; Toxic Asset Relief Program; improve banking procedures
e. Generalized Agreement on Tariffs and Trade; U.S. Agency for International Development;
improve research potential in developing countries
ANS: A DIF: Easy REF: 6.2 TOP: II.E.
MSC: Understanding

30. In the Romer model, what are the two key outputs produced?
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.
ANS: B DIF: Easy REF: 6.3 TOP: III.
MSC: Understanding

31. In the Romer model, the inputs to production are:

a. capital and labor. d. natural resources, labor, and ideas.
b. capital and ideas. e. labor and total factor productivity.
c. labor and ideas.
ANS: C DIF: Easy REF: 6.3 TOP: III.
MSC: Understanding

32. In the Romer model, the production function , where At is knowledge and Lyt is the
amount of labor in the output sector, exhibits:
a. constant returns to labor and increasing returns to labor and knowledge.
b. constant returns to labor and increasing returns to knowledge.
c. increasing returns to labor and constant returns to labor and knowledge.
d. decreasing returns to labor and constant returns to labor and knowledge.
e. increasing returns to labor and increasing returns to labor and knowledge.
ANS: A DIF: Moderate REF: 6.3 TOP: III.
MSC: Understanding

33. In the knowledge production function represents:

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.
ANS: D DIF: Easy REF: 6.3 TOP: III.
MSC: Understanding

34. In the Romer model, ________ is the resource constraint.

a. and d.
b. e. There is no resource constraint.
c.

ANS: B DIF: Easy REF: 6.3 TOP: III.A.

MSC: Remembering

35. In the Romer model, the more labor you dedicate to generating ideas, the ________ but ________.
a. faster you accumulate knowledge; at a loss to current output in the consumption sector
b. faster you accumulate knowledge; at a gain to current output in the consumption sector
c. slower you accumulate knowledge; at a loss to current output in the consumption sector
d. less you accumulate knowledge; at a gain to current output in the consumption sector
e. more knowledge you lose; at a gain to current output in the consumption sector
ANS: A DIF: Moderate REF: 6.3 TOP: III.A.
MSC: Understanding
36. The production function in the Romer model is given by ________, where is the growth rate of
________.
a. ; capital d. ; knowledge
b. ; knowledge e. ; population
c. ; population

ANS: D DIF: Moderate REF: 6.3 TOP: III.A.

MSC: Understanding

37. In the Romer model, output is increasing in the ________ and decreasing in the ________.
a. saving rate; depreciation rate
b. research share; growth rate of knowledge
c. growth rate of knowledge; fraction of population in the ideas sector
d. growth rate of knowledge; depreciation rate
e. saving rate; growth rate of knowledge
ANS: C DIF: Moderate REF: 6.3 TOP: III.A.
MSC: Analyzing

38. In the Romer model, if an economy allocates all of its labor to production, it will:
a. reduce output.
b. reduce the number of ideas it generates.
c. increase the number of ideas it generates.
d. not generate any ideas.
e. None of these answers is correct.
ANS: D DIF: Moderate REF: 6.3 TOP: III.A.
MSC: Analyzing

39. The production of new ideas in the Romer model is:

a. increasing in the efficiency of creating knowledge and the fraction of labor in research and
development.
b. decreasing in the efficiency of creating knowledge and increasing the fraction of labor in
research and development.
c. increasing in the efficiency of creating knowledge and decreasing in the fraction of labor
in research and development.
d. increasing in the population growth rate and capital accumulation.
e. decreasing in the efficiency of creating knowledge and in the fraction of labor in research
and development.
ANS: A DIF: Moderate REF: 6.3 TOP: III.A.
MSC: Analyzing

40. In the Romer model, the growth rate of ideas, , is increasing in the:
a. share of the population doing research and the total population.
b. knowledge efficiency parameter and the population growth rate.
c. knowledge efficiency parameter, the research share, and the total population.
d. knowledge efficiency parameter and the saving rate.
e. share of population engaged in research and development and the saving rate.
ANS: C DIF: Moderate REF: 6.3 TOP: III.A.
MSC: Analyzing
41. In the Romer model, the growth rate of knowledge is given by:
a. d.
. .
b. e.
. .

c.
.

ANS: E DIF: Easy REF: 6.3 TOP: III.A.

MSC: Understanding

42. In the Romer model, if Canada and Taiwan have the same fraction of researchers and the same
knowledge efficiency parameter but Canada’s population is larger, then:
a. Taiwan has a higher per capita output growth rate.
b. Canada has a higher per capita output growth rate.
c. each country’s per capita output grows at the same rate.
d. Canada has higher per capita income than Taiwan.
e. Canada’s level of income is greater than Taiwan’s.
ANS: B DIF: Difficult REF: 6.3 TOP: III.A.
MSC: Analyzing

43. Suppose the parameters of the Romer model take the following values: ,
and What is the growth rate of this country’s economy?
a. 10 percent d. 50 percent
b. 40 percent e. 0.10 percent
c. 0.02 percent
ANS: D DIF: Moderate REF: 6.3 TOP: III.A.
MSC: Analyzing

44. Suppose the parameters of the Romer model take the following values:
and What is the growth rate of this country’s economy?
a. 2 percent d. 10 percent
b. 20 percent e. 0.01 percent
c. 0.2 percent
ANS: B DIF: Moderate REF: 6.3 TOP: III.A.
MSC: Analyzing

45. Suppose the parameters of the Romer model take the following values:
and What is the number of researchers in this country?
a. 20 d. 0.10
b. 1 million e. 200
c. 100
ANS: C DIF: Moderate REF: 6.3 TOP: III.A.
MSC: Analyzing

46. 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?
a. about 1.19 d. about 14.3
b. about 11.9 e. about 9.9
c. about 12.0
ANS: B DIF: Moderate REF: 6.3 TOP: III.A.
MSC: Analyzing

47. Suppose the parameters of the Romer model take the following values:
and What is the per capita income of this country in the 10th
period, y10?
a. about 6.13 d. about 11.9
b. about 61.3 e. about 10.9
c. about 12.0
ANS: B DIF: Difficult REF: 6.3 TOP: III.A.
MSC: Analyzing

48. Suppose the parameters of the Romer model take the following values:
and What is the per capita income of this country in the initial
period, y0?
a. about 12.1 d. about 1.19
b. about 11.9 e. about 9.9
c. about 12.0
ANS: E DIF: Moderate REF: 6.3 TOP: III.A.
MSC: Analyzing

49. If the economies of East and West Timor are identical in every way except that East Timor has
fewer researchers:
a. West and East Timor will grow at the same rate.
b. East Timor should grow faster, according to the Romer model.
c. West Timor should grow faster, according to the Solow model.
d. West Timor should grow faster, according to the Romer model.
e. East Timor is smaller than West Timor.
ANS: D DIF: Difficult REF: 6.3 TOP: III.B.
MSC: Analyzing

50. Suppose the Romer model parameters in East Timor are and
while in North Timor they are and
then:
a. neither country grows.
b. East Timor’s per capita income growth rate is 20 percent and North Timor’s is 2 percent.
c. East Timor’s per capita income growth rate is 5 percent and North Timor’s is 0.05 percent.
d. East Timor’s per capita income growth rate is 100 percent and North Timor’s is 1 percent.
e. each country’s per capita income growth rate is 20 percent.
ANS: B DIF: Difficult REF: 6.3 TOP: III.B.
MSC: Analyzing
51. Nonrivalry in the knowledge sector means that:
a. per capita income depends on the total population.
b. per capita income depends on some of the stock of ideas.
c. per capita income depends on the total stock of ideas.
d. labor in the ideas sector also can be used in the output sector.
e. all labor is used in the ideas sector.
ANS: C DIF: Moderate REF: 6.3 TOP: III.B.
MSC: Remembering

52. In the Romer model, ________ is the driving force behind sustained ________ economic growth.
a. labor; long-term d. capital; short-term
b. knowledge; short-term e. capital; long-term
c. knowledge; long-term
ANS: C DIF: Easy REF: 6.3 TOP: III.B.
MSC: Understanding

53. Idea accumulation in the Romer model exhibits:

a. increasing returns to capital.
b. diminishing returns in the stock of ideas.
c. negative returns in the stock of ideas.
d. no diminishing returns in the stock of ideas.
e. diminishing returns to labor.
ANS: D DIF: Easy REF: 6.3 TOP: III.B.
MSC: Understanding

54. Because there are no diminishing returns in the stock of ideas in the Romer model:
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.
ANS: A DIF: Moderate REF: 6.3 TOP: III.B.
MSC: Understanding

55. The Romer model might be made more realistic by considering:

a. that there is a fixed labor productivity measure for all countries.
b. the global population instead of a single country’s population.
c. that researchers are heterogeneous.
d. the global stock of ideas.
e. productivity as being infinite.
ANS: D DIF: Moderate REF: 6.3 TOP: III.B.
MSC: Understanding

56. In the Romer model, the Mexican economy:

a. never generates new ideas.
b. can use ideas devised in the United States.
c. cannot use ideas devised in the United States.
d. eventually will reach a steady state.
e. does not have an ideas sector.
ANS: B DIF: Moderate REF: 6.3 TOP: III.H.
 MSC: Evaluating

57. Nonrivalry in the Romer model means that ideas created can:
a. benefit only similar economies.
b. benefit only a few economies across the world.
c. be used only in the economy that devised them.
d. benefit virtually all economies across the world.
e. None of these answers is correct.
ANS: D DIF: Easy REF: 6.3 TOP: III.B.
MSC: Evaluating

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

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.
ANS: D DIF: Easy REF: 6.3 TOP: III.C.
MSC: Remembering

59. The parameter(s) in the Romer model is/are the:

a. initial stock of ideas, the population, the fraction of population in the ideas sector, and the
ideas efficiency parameter.
b. ideas efficiency parameter.
c. fraction of population in the ideas sector and the ideas efficiency parameter.
d. initial capital stock and the fraction of population in the ideas sector.
e. initial capital stock and the ideas efficiency parameter.
ANS: A DIF: Moderate REF: 6.3 TOP: III.C.
MSC: Understanding

60. The reason that economic growth in Luxembourg is greater than the growth rate in the United
States is:
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.
ANS: B DIF: Easy REF: 6.3 TOP: III.D.
MSC: Remembering

Figure 6.1: Romer Model: Per Capita Output

61. In the Romer model in Figure 6.1, at time t0, a change in the growth rate of per capita output can be
explained by a(n):
a. decrease in the ideas efficiency parameter.
b. increase in the population.
c. increase in the share of labor engaged in research.
d. increase in the saving rate.
e. decrease in the population.
ANS: B DIF: Moderate REF: 6.3 TOP: III.E.1.
MSC: Analyzing

Figure 6.2: Romer Model: Per Capita Output

62. In the Romer model in Figure 6.2, at time t0, a change in the shape of the production function can
be explained by an increase in the:
a. population.
b. share of labor engaged in research.
c. ideas efficiency parameter.
d. saving rate.
e. growth rate.
ANS: B DIF: Moderate REF: 6.3 TOP: III.E.2.
MSC: Analyzing

63. In the Romer model, if an economy’s population increases:

a. output growth decelerates.
b. output immediately increases and output growth slows.
c. output immediately decreases and output growth slows.
d. output immediately decreases and output growth accelerates.
 e. output growth accelerates.
ANS: E DIF: Moderate REF: 6.3 TOP: III.E.1.
MSC: Analyzing

64. In the Romer model, if an economy’s share of researchers decreases, there will be:
a. an immediate decrease in output and output growth will slow.
b. an immediate increase in output and output growth will slow.
c. an immediate increase in output and output growth will accelerate.
d. an immediate decrease in output and output growth will accelerate.
e. no change in output but output growth will slow.
ANS: B DIF: Moderate REF: 6.3 TOP: III.E.2.
MSC: Analyzing

65. In the ideas sector production function, , there are:

a. increasing returns to the ideas stock but decreasing returns overall.
b. decreasing returns to the ideas stock but increasing returns overall.
c. decreasing returns to the ideas stock and labor.
d. increasing returns to the ideas stock and labor.
e. None of these answers is correct.
ANS: B DIF: Moderate REF: 6.3 TOP: III.F.
MSC: Analyzing

66. Even if there are decreasing returns to the ideas stock in the knowledge sector, the Romer model:
a. cannot explain sustained growth.
b. can explain an economy that reaches its steady state.
c. can explain sustained growth.
d. cannot explain why economies’ saving rates differ.
e. cannot explain why the output sector exhibits decreasing returns.
ANS: C DIF: Easy REF: 6.3 TOP: III.F.
MSC: Understanding

67. In the Romer model, with decreasing returns to the knowledge sector:
a. the transition dynamics appear very similar to those in the Solow model.
b. an increase in the research share decreases the growth rate in the short run.
c. an increase in the research share increases the growth rate in the short and long runs.
d. a decrease in the research share increases the growth rate in the short run.
e. There are no level effects.
ANS: A DIF: Moderate REF: 6.3 TOP: III.F.
MSC: Understanding

68. In the Romer model, with decreasing returns to the knowledge sector:
a. the number of researchers is irrelevant to long-term per capita income.
b. more researchers produce more ideas, raising the long-run growth rate of per capita
income.
c. more researchers produce fewer ideas, raising the long-run growth rate of per capita
income.
d. more researchers produce more ideas, raising the long-run level of per capita income.
e. more researchers cause the knowledge stock to contract.
ANS: D DIF: Moderate REF: 6.3 TOP: III.F.
 MSC: Understanding

69. According to the Case Study on Globalization and Ideas in the text, in ________ there are about
________ for every phone landline in the region.
a. sub-Saharan Africa; 10 cell phones d. Latin America; two cars
b. Southeast Asia; 0.5 computers e. eastern Europe; three modems
c. the Indian subcontinent; five pagers
ANS: A DIF: Easy REF: 6.3 TOP: III.H.
MSC: Remembering

70. In the combined Solow-Romer model, long-run growth is sustained because of:
a. population growth. d. total factor productivity.
b. capital accumulation. e. no capital depreciation.
c. the nonrivalry of ideas.
ANS: C DIF: Easy REF: 6.4 TOP: IV.
MSC: Remembering

71. According to the combined Solow-Romer model, all countries grow at:
a. the same rate in the long run, but actual growth rates can differ across countries for long
periods of time.
b. the same rate in the medium and long runs.
c. different rates forever.
d. the same rate as the United States in each period.
e. different rates in the long run, but actual growth rates are the same across countries for
long periods of time.
ANS: A DIF: Easy REF: 6.4 TOP: IV.
MSC: Remembering

72. In the combined Solow-Romer model, the growth rate of total output, using the standard
production function, is given as:
a. . d. .
b. . e. .
c. .

ANS: B DIF: Easy REF: 6.5 TOP: V.

MSC: Understanding

73. In the combined Solow-Romer model, the growth rate of total output, using the production
function , is given as:
a. . d. .
b. . e. .
c. .

ANS: C DIF: Moderate REF: 6.5 TOP: V.

MSC: Analyzing

74. Labor composition is used in “growth accounting” because it:

a. includes total number of hours worked.
b. can include changes in the age distribution of the labor force.
c. can include the educational attainment in the labor force.
d. includes the total number of workers.
 e. All of these answers are correct.
ANS: C DIF: Moderate REF: 6.5 TOP: V.
MSC: Understanding

75. “Growth accounting” endeavors to:

a. measure GDP.
b. measure economic growth rates.
c. determine how capital accumulates.
d. measure what factors—and in what proportions—affect overall economic growth.
e. measure global output and the proportion of global output attributed to each country.
ANS: D DIF: Easy REF: 6.5 TOP: V.
MSC: Understanding

76. In the growth accounting equation, , B represents

________, while C is called ________.

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.
ANS: C DIF: Moderate REF: 6.5 TOP: V.
MSC: Understanding

77. In the growth accounting equation, , A represents

________, while B is called ________.

a. labor composition; capital accumulation
b. the contribution from capital; the (Solow) residual
c. the contribution from capital; labor composition
d. educational attainment; labor composition
e. per capita capital contribution; labor composition
ANS: C DIF: Moderate REF: 6.5 TOP: V.
MSC: Understanding

78. In growth accounting, the residual, gA, is so named because:

a. the economy is complicated.
b. economists know exactly what contributes to growth.
c. it is a way to measure observed TFP growth.
d. it is a way to measure unobserved TFP growth.
e. it measures labor composition.
ANS: D DIF: Moderate REF: 6.5 TOP: V.
MSC: Understanding

79. 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?
a. 3.6 percent d. 4.0 percent
b. 1.8 percent e. 2.3 percent
c. 1.4 percent
 ANS: C DIF: Moderate REF: 6.5 TOP: V.
MSC: Analyzing

80. 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?
a. 0.6 percent d. 1.2 percent
b. 2.6 percent e. 1.3 percent
c. 3.4 percent
ANS: A DIF: Moderate REF: 6.5 TOP: V.
MSC: Analyzing

81. For the years 1948–1973, output per person in the private sector grew 3.3 percent, labor
composition grew 0.2 percent, and total factor productivity grew 2.2 percent. What was the growth
rate of capital intensity?
a. −1.5 percent d. 5.3 percent
b. 1.3 percent e. 0.9 percent
c. 3.2 percent
ANS: E DIF: Moderate REF: 6.5 TOP: V.
MSC: Analyzing

Refer to the following table when answering the following questions.

Table 6.1: Growth Accounting
Growth (%) 1948–2011 1948–1973 1973–1995 1995–2007 2007–2011
K/L 0.9 0.9 0.7 1.1 1.1
Labor Comp 0.2 0.2 0.3 0.2 0.4
TFP 1.4 2.2 0.5 1.5 0.4

82. Consider the growth accounting data in Table 8.1. If the production function is given by
, the growth rate of per capita GDP for 1948–2011 is ________ percent.
a. −1.7 d. 2.6
b. 2.1 e. 1.8
c. 3.3
ANS: E DIF: Moderate REF: 6.5 TOP: V.
MSC: Analyzing

83. Consider the growth accounting data in Table 8.1. If the production function is given by
, the growth rate of per capita GDP for 1948–1973 is ________ percent.
a. −1.7 d. 0.0
b. 0.8 e. 2.6
c. 1.1
ANS: E DIF: Moderate REF: 6.5 TOP: V.
MSC: Analyzing

84. Consider the growth accounting data in table 8.1. If the production function is given by
, the growth rate of per capita GDP for 1995–2007 is ________ percent.
a. 2.2 d. 1.5
b. 2.8 e. −0.9
 c. 2.0
ANS: A DIF: Moderate REF: 6.5 TOP: V.
MSC: Analyzing

85. Consider the growth accounting data in table 8.1. If the production function is given by
, the fastest growth rate of per capita GDP occurred during which period?
a. 1948–1973 d. 2007–2011
b. 1973–1995 e. Not enough information is given.
c. 1995–2007
ANS: A DIF: Moderate REF: 6.5 TOP: V.
MSC: Evaluating

86. In growth accounting, if we subtract the capital intensity growth rate and the labor composition
growth rate from the growth rate of output per person, we have:
a. the growth rate of total factor productivity.
b. the Markov residual.
c. capital accumulation.
d. savings.
e. education.
ANS: A DIF: Moderate REF: 6.5 TOP: V.
MSC: Evaluating

87. In the combined Solow-Romer model, an exogenous increase in the saving rate:
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.
ANS: A DIF: Difficult REF: 6.5 TOP: IV.
MSC: Evaluating

88. In the combined Solow-Romer model, an exogenous increase in the saving rate:
a. pushes the economy to a lower per capita output balanced growth path.
b. pushes the economy to a higher per capita output balanced growth path.
c. pushes the economy’s growth rate of per capita output to infinity.
d. pushes the economy to a new steady-state level of per capita output.
e. has no impact on the growth rate or level of per capita output.
ANS: B DIF: Difficult REF: 6.5 TOP: IV.
MSC: Evaluating

89. In the combined Solow-Romer model, the total output growth rate:
a. equals the growth rate of ideas.
b. is greater than the growth rate of ideas.
c. is lower than the growth rate of ideas.
d. equals the rate of capital depreciation.
e. is greater than the population growth rate.
 ANS: B DIF: Difficult REF: 6.5 TOP: IV.
MSC: Evaluating

90. In the combined Solow-Romer model, the total output growth rate is greater than in the Romer
model because:
a. the saving rate is higher. d. of capital accumulation.
b. of population growth. e. of a greater research share.
c. capital depreciation is zero.
ANS: D DIF: Difficult REF: 6.5 TOP: IV.
MSC: Evaluating

TRUE/FALSE

1. New irrigation techniques are examples of ideas.

ANS: T DIF: Easy REF: 6.1 TOP: II.A.

MSC: Evaluating

2. The signals of the TV show Dexter are a rival good.

ANS: F DIF: Easy REF: 6.2 TOP: II.B.

MSC: Evaluating
NOT: They are nonrivalrous. It is difficult or too costly to prevent others from watching it if you
are.

3. The “idea” of the assembly line leads to increasing returns.

ANS: T DIF: Easy REF: 6.2 TOP: III.A.

MSC: Evaluating NOT: All firms can use the same production technology.

4. The number of ideas is finite.

ANS: F DIF: Easy REF: 6.2 TOP: II.A.

MSC: Understanding NOT: They are limited only by imagination.

5. The production function , where At is the stock of ideas, Kt is capital, and Lt is

labor, assumes that At is rivalrous.

ANS: F DIF: Moderate REF: 6.2 TOP: II.B.

MSC: Understanding
NOT: The technology “bleeds” throughout the aggregate production process; it is nonrivalrous.

6. There is no difference between the stock of ideas and total factor productivity.

ANS: F DIF: Easy REF: 6.2 TOP: II.B.

MSC: Evaluating
NOT: The stock of ideas changes from one period to the next; factor productivity is assumed to be
an economy-specific idiosyncratic parameter.

7. In a monopolistically competitive market equilibrium, the price is equal to the marginal cost.

ANS: F DIF: Moderate REF: 6.2 TOP: II.C.

 MSC: Understanding

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

ANS: T DIF: Easy REF: 6.2 TOP: II.C.

MSC: Understanding

9. In the Romer model, the more labor you dedicate to generating ideas, the slower you accumulate
knowledge, but at a loss to current output in the consumption sector.

ANS: F DIF: Moderate REF: 6.3 TOP: III.A.

MSC: Understanding

10. In the Romer model, the growth rate of knowledge is .

ANS: F DIF: Easy REF: 6.3 TOP: III.A.

MSC: Remembering

11. Suppose Chile and Côted’Ivoire have the same fraction of researchers and the same knowledge
efficiency parameter, but Chile’s population is larger. Chile has a higher per capita output growth
rate.

ANS: T DIF: Moderate REF: 6.3 TOP: III.A.

MSC: Evaluating

12. In the Romer model, the creation of capital is the driving force behind sustained long-term
economic growth.

ANS: F DIF: Easy REF: 6.3 TOP: III.A.

MSC: Understanding
NOT: In the Romer model, the generating of ideas sustains long-term economic growth.

13. The Romer model relies on increasing returns to ideas and labor.

ANS: T DIF: Easy REF: 6.3 TOP: III.A.

MSC: Understanding

14. In the Romer model, if the population increases exogenously, the growth of knowledge stays
constant.

ANS: F DIF: Moderate REF: 6.4 TOP: IV.

MSC: Understanding NOT: It increases.

15. According to the combined Solow-Romer model, all countries grow at the same rate in the medium
and long runs.

ANS: F DIF: Moderate REF: 6.4 TOP: IV.

MSC: Understanding
NOT: All countries grow at the same rate in the long run, but actual growth rates can differ across
countries for significant periods of time.

16. In the combined Solow-Romer model, the growth rate of total output, using the standard
production function, is given as .
 ANS: T DIF: Moderate REF: 6.4 TOP: V.
MSC: Understanding

17. In the growth accounting equation for the standard Cobb-Douglas production function,
.

ANS: F DIF: Easy REF: 6.5 TOP: V.

MSC: Understanding

18. In growth accounting, if we subtract the capital intensity growth rate and the labor composition
growth rate from the growth rate of output per person, we have the growth rate of total factor
productivity.

ANS: T DIF: Moderate REF: 6.5 TOP: V.

MSC: Evaluating NOT: We also call it the (Solow) residual.

19. In the growth accounting equation

represents the growth rate of labor composition.

ANS: F DIF: Moderate REF: 6.5 TOP: V.

MSC: Remembering NOT: It represents the (Solow) residual.

20. In the combined Solow-Romer model, an exogenous increase in the saving rate has no effect on
the growth rate or level of per capita output.

ANS: F DIF: Difficult REF: 6.5 TOP: IV.

MSC: Evaluating
NOT: It pushes the economy to a higher per capita output balanced growth path.

21. In the combined Solow-Romer model, the steady-state level of output is positively related to the
saving and depreciation rates.

ANS: F DIF: Difficult REF: 6.5 TOP: VII.

MSC: Evaluating
NOT: It is positive in the saving rate but not the depreciation rate; see equation (6.23) in
Appendix.

SHORT ANSWER

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

ANS:
In the Romer model, new ideas are “public” goods (that is, nonrival in consumption). Essentially,
new ideas can be consumed by everyone, in this case producers, without reducing other
individuals’ consumption of that good. In this context, ideas can be used by everyone, which leads
to increasing returns to scale. This justifies the production function in the Romer model,
, which has increasing returns to scale with respect to both factors together. In the
Romer model, this leads to a balanced growth path, or a constant steady-state growth rate, but not a
steady-state (zero growth) level of output.

DIF: Difficult REF: 6.2 TOP: II.B. MSC: Evaluating

Another random document with
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JESUS, Discovery of a fragment of the Logia or Sayings of.

See (in this volume)

ARCHÆOLOGICAL RESEARCH: EGYPT: DISCOVERY OF A
FRAGMENT.

----------JEWS: Start--------

JEWS:
Discovery of the sole mention of the people of Israel in
Egyptian inscriptions.

See (in this volume)

ARCHÆOLOGICAL RESEARCH: EGYPT: RESULTS.

JEWS:
General results of recent archæological research as affecting
our knowledge of the ancient Hebrews.

See (in this volume)

ARCHÆOLOGICAL RESEARCH: IN BIBLE LANDS.

JEWS: A. D. 1897:
Freedom of residence in Russia given
to the university educated.

See (in this volume)

RUSSIA: A. D. 1897.

JEWS: A. D. 1897-1901.
The Zionist movement.

"The three closing days of August [1897] saw a congress at

Basle concerning the significance of which friends and foes
alike seem already pretty well agreed. It was the Congress of
Zionists. Zionists! Until then that word was almost unknown to
the public at large. Zionism virtually made its bow to the
Gentile world at Basle, and disclosed for the first time what
its aims and its needs were. … It was in my work, 'The Jewish
State,' which appeared a year and a half ago, that I first
formulated what the Congress at Basle virtually adopted as an
axiom. In the terms of that definition: 'Zionism has for its
object the creation of a home, secured by public rights, for
those Jews who either cannot or will not be assimilated in the
country of their adoption.'

"Nothing was more instructive at the Basle Congress than the

vigour—I might almost say violence—with which the
representatives of the great Jewish strata of population
resisted any attempt to limit the guarantees for a State based
on public rights. The executive appointed to draw up a
programme had proposed 'a legally secured home.' The
delegates, however, were not satisfied, and clamoured for an
alteration to 'secured on the basis of international rights.'
It was only by adopting the intermediary expression 'public
rights' that an agreement was arrived at. The significance of
this logomachy is, that what the Jews desire is not to acquire
more tracts of land, but a country for the Jewish people, and
to emphasise that desire in terms as plain as possible without
wounding certain legitimate and sovereign susceptibilities. We
can acquire land any day in our private right everywhere. But
that is not the point with Zionists. In our case we have
nothing to do with private rights. That will come later—as
well as the land speculators—once our movement has achieved
success. What the Zionists are alone directing their attention
to is the 'public rights' idea. In that they hope to find a
remedy for the old evil. Were I to express myself
paradoxically, I should say that a country belonging to the
Jews on the basis of public rights, even though down to the
very last parcel it was the legally secured property of
non-Jews, would mean the final solution of the Jewish
question. … We have held a gathering at Basle before the whole
world, and there we saw the national consciousness and the
popular will break forth, at times like a convulsive upheaval.
To Basle came Jews of all countries, of all tongues, of all
parties, and of all forms of religious confession. There were
more than 200 representatives of the Jewish people—most of
them delegates for hundreds and thousands. Men from Roumania
alone brought over 50,000 signatures of those who had sent
them there. There surely was never such a motley assembly of
opinions in such a narrow space before. On the other hand,
there would certainly have been more conflict of opinion in
any other deliberative assembly than there was in this. …

"It would … appear to be to the interest of Turkey to come to

an arrangement with the Jews. But, what are the interests
which other Governments would have in assisting the
realisation of a legally guaranteed Jewish home? The interest
would vary with each country, but it is present in some form
or other everywhere. It would mean the drawing off of an
unhappy and detested element of population which is reduced
more and more to a condition of despair, and which, scattered
over the face of the earth, and in a state of unrest, must
perforce identify itself with the most extreme parties
everywhere. Governments and all friends of the existing order
of things cannot bring themselves to believe that, by helping
us in the solution we propose, they could give peace to an
element which has been driven to revolution and rendered
dangerous through its dispersion. That a highly conservative
people, like the Jews, have always been driven into the ranks
of revolutionists is the most lamentable feature in the
tragedy of our race. Zionism would mean an end to all that. We
should see results accrue for the general condition of
mankind, the full benefits of which we cannot even guess.
There are, of course, a great number of existing political
difficulties to be overcome, but these, given the necessary
good will, might be surmounted."

Theodor Herzl,
The Zionist Congress
(Contemporary Review, October, 1897).
{284}

"The programme of the Philo-Zionists as defined in their

printed constitution is as follows:

(a) To foster the national idea in Israel.

(b) To promote the colonization of Palestine and neighbouring

territories by Jews, by establishing new colonies and
assisting those already established.

(c) To diffuse the knowledge of Hebrew as a living language.

(d) To further the moral, intellectual, and material status of

Israel.

The English Association, known as the Chovevi Zion, is

presided over by Colonel Albert Edward Goldsmid, Assistant
Adjutant-General of Her Majesty's Forces; it has 35
established 'Tents' spread through the length and breadth of
the United Kingdom. … Similar associations have been
established in America, Germany, France, Russia, Austria,
Denmark, Switzerland, and other countries; and there is a
central committee meeting at Paris, where the organisation of
new colonies and development of existing ones in the Holy Land
is systematically carried out. Even before these associations
had been called into existence Baron Edmond de Rothschild of
Paris, encouraged by the success of the agricultural schools
at Jaffa, founded by the late Charles Netter, had devoted his
vast influence and his open purse to the work; and there is a
separate administration in Palestine charged with the control
and management of what are known as 'the Baron's colonies.'

"To-day we have in Palestine between twenty and thirty

distinct colonies or communities spreading along the coast
from Askalon in the south to Carmel in the north, and along
the Jordan from the Waters of Meron to the Sea of Galilee in
the east. The population of these colonies varies from 100 to
700 souls, and they may safely be estimated to number 10,000
souls in all, independently of the large number of Jewish day
labourers from neighbouring towns and villages, to whom they
give occasional employment. There are 50,000 more Jews—mostly
refugees—in the various Holy Cities, and the immediate problem
is to get these—or the better part of them—also on the land.
The current language of the colonists is the Hebrew of the
Bible, although many of them have acquired the native Arabic,
and also French, which is taught in their schools. They have
their places of worship, their houses of study, their modest
institutes, their public baths, and in fact the counterpart in
small of all the features of the model European village: and
they have, thanks to the Baron and the Philo-Zionists'
Associations, the most modern appliances and complete
installations for the prosecution of their agricultural
works."

Herbert Bentwich,
Philo-Zionists and Anti-Semites
(Nineteenth Century, October, 1897).

"At the beginning of March, 1898, an important Conference was

held in London, attended by delegates from nearly 50
societies, representing 10,000 English Zionists, and
resolutions were passed adopting the International programme,
and making provisions for a federation of all the English
Zionist bodies. Similar conferences were held in New York, in
Berlin, in Galatz (Roumania), and other great centres; and
local federations were everywhere formed to give greater
strength and solidity to the general organization. At the
second International Congress, which was held at Basle in
August, 1898, and was attended by an imposing body of more
than 500 delegates, the Executive Committee were able to
report that the 'Basle programme' had received the support of
913 Zionist organizations (out of which over 700 had sprung up
since the first Congress), it being calculated that these
represented at least a quarter of a million of active members.
The Congress had become the authorised representative and
exponent of the people's wishes, and the Zionists had become a
power to be reckoned with in any settlement of the Jewish
question. Prominent among the attendants at this world
gathering were the Rabbis—crown officials from orthodox Russia
and Poland, as well as the elect of reform congregations from
America—who took an active interest in the settlement of the
programme of work for the ensuing year, which was the main
business of the meeting."

H. Bentwich,
The Progress of Zionism
(Fortnightly Review, December, 1898).

At the International Zionist Congress which assembled in

London on the 13th of August, 1900, the report of the
executive committee on the progress which the movement has
made showed as follows: "In Russia there are at least 100,000
members of Zionist societies; in England the movement is
supported by 38 societies, as against 16 last year, and all
these societies have increased membership. Thanks to the work
of the English Zionist Federation Zionism has made great
headway in England. In the United States there are 135
societies, as against 102 last year. Notwithstanding the war
in South Africa, the contributions towards the expenses of the
movement have been well maintained. Having regard to the
returns received by the executive committee the reporter felt
no hesitation in saying that to-day the vast majority of the
Jewish nation were in favour of Zionism."

London Times,
August 15, 1900.

Late in December, 1900, it was announced at Vienna that the

Sultan had issued or renewed a decree, according to which the
 Jews are forbidden to remain in Palestine for longer than
three months. This measure, which applies both to traders and
pilgrims, further prohibits the acquisition by Jews of landed
property. It was suggested that the wholesale exodus of Jews
from Russia and their recent emigration from Rumania gave rise
to the apprehension that they might overcrowd Palestine. This
apprehension is said to have been strengthened by the
increasing activity of the Zionists, who are suspected in
certain circles in Constantinople of pursuing distinct
political ends. According to another suggestion, Russia had
grown jealous of the Jewish colonization of Palestine, fearing
it to be in the interest of German policy, and had used
influence to check it.

"Viewed merely on its prosaic side, Zionism is by no means a

visionary scheme. The aggregation of Jews in Palestine is only
a matter of time, and it is better that they should be
aggregated there under their own laws and religion, and the
mild suzerainty of the Sultan, than under the semi-barbarous
restrictions of Russia or Roumania, and exposed to recurrent
popular outbreaks. True, Palestine is a ruined country, and
the Jews are a broken people, but neither is beyond
recuperation. Palestine needs a people, Israel needs a
country. If, in regenerating the Holy Land, Israel could
regenerate itself, how should the world be other than the
gainer? In the solution of the problem of Asia, which has just
succeeded the problem of Africa, Israel might play no
insignificant part. Already the colony of Rishon le Zion has
obtained a gold medal for its wines from the Paris Exposition,
which is not prejudiced in the Jew's favor.
{285}
We may be sure the spiritual wine of Judæa would again pour
forth likewise that precious vintage which the world has drunk
for so many centuries. And as the unscientific activities of
the colonization societies would have paved the way for the
pastoral and commercial future of Israel in its own country,
so would the rabbinical sing-song in musty rooms prove to have
 been but the unconscious preparation of the ages for the
Jerusalem University.

"But Palestine belongs to the Sultan, and the Sultan refuses

to grant the coveted Judæan Charter, even for dangled
millions. Is not this fatal? No, it matters as little as that
the Zionists could not pay the millions, if suddenly called
upon. They have barely collected a quarter of a million (in
English pounds). But there are millionaires enough to come to
the rescue, once the charter was dangled before the Zionists.
It is not likely that the Rothschilds would see themselves
ousted from their familiar headship in authority and
well-doing, nor would the millions left by Baron Hirsch be
altogether withheld. And the Sultan's present refusal is
equally unimportant, because a national policy is independent
of transient moods and transient rulers. The only aspect that
really matters is whether Israel's face be, or be not, set
steadily Zionwards,—for decades and even for centuries. Much
less turns on the Sultan's mind than on Dr. Herzl's. Will he
lose patience? for leaders like Herzl are not born in every
century."

I. Zangwill,
The Wandering Jew and the New Century
(Sunday School Times, January 12, 1901).

JEWS: A. D. 1899.
In Palestine.

"In view of the impetus given the Zionist movement by the

second Zionist congress, held at Basel in September, and also
by the Palestine journey of Emperor Wilhelm II, the present
status of Jews in Palestine becomes a matter of general
interest. Out of a total population in Palestine of some
200,000 souls, about 40,000 are Jews, as against 14,000 twenty
years ago. In Jerusalem, there are 22,000 Jews, half of whom
have immigrated from Europe and America and are called
Asehkenazim to distinguish them from the oriental Israelites,
the Sephardists. Nine hundred and sixty families, numbering
about 5,000 souls, inhabit the twenty-two Jewish colonies in
Palestine which have been founded and subsidized by Europeans
—ten by Baron Edmond de Rothschild, representing the Alliance
Israélite Universelle; the rest by the Jewish Colonization
Association and by the Odessa Company.

"The idea of gathering in Palestine homeless Jews scattered

all over the globe was championed in the forties by Moses
Montefiore, but with indifferent success. In the eighties,
however, the immigration of Jews to Palestine assumed
significant proportions. Of the twenty-two present colonies,
the 'Jacob Memorial' is the largest, supporting more than
1,000 souls. It boasts a graded school (five teachers), a
synagogue, etc., and 4,000 acres of land under cultivation, on
which are raised fruit (chiefly grapes), honey, and mulberry
leaves, the rearing of silkworms being a leading industry. The
'First to Zion' is another quite important colony, owning
2,000 acres of land. Some forty two-storied stone dwelling
houses greet the eye of the approaching stranger; also a
school house with a Hebrew library, a synagogue, and a
hospital. One million five hundred thousand vines and 25,000
olive, almond, orange, and mulberry trees belong to this
colony, which also possesses famous wine cellars. The 'Hope of
Israel,' a mile beyond Yafa, in the plains of Sharon, is
perhaps best known for its agricultural school, in which one
hundred or more pupils are taught gardening. Recently, a high
school for Jewish girls was established in Yafa. The 'Head
Corner Stone,' amid the hills beyond Tiberias, with
snow-capped Hermon in the background, is another quite
prosperous Jewish colony in Palestine. Being near the source
of the Jordan, water is plentiful; and its situation, high up
above the level of Lake Gennesareth, insures fair climatic
conditions. In the 'Door of Hope,' dairy farming is profitably
followed and experiments made in tea planting. This colony is
said to have 1,000,000 vines.
"Entirely irrespective of whether or not the Zionists will
succeed in awakening in the Jewish people a national spirit
and forming a Judean monarchy or republic, with its parliament
in Jerusalem and its representation in foreign capitals, the
present agitation makes for the development of a country which
is but a shadow of its former self, and which will generously
respond to modern influences. The Sultan seems quite disposed
to grant railway, harbor, and other franchises, and it is
possible that the new Jewish Colonial Bank, the organization
of which was decided upon in Basel, will be permitted, under
certain guaranties, to play an important part in the
industrial advancement and growth of Palestine. The movement
is furthermore bringing out new qualities in the Jews residing
in Palestine. They are no longer content with studying the
Talmud and living on charity, but are waking to the fact, as
the Hebrew would put it, that to till the ground is worship of
God.

"It should not be inferred from statements here made that

peace and prosperity have suddenly become the lot of the Jews
in Palestine. Only a few days ago, Rev. William King Eddy, of
Sidon, returned from beyond the Jordan, and he informs me that
a Jewish colony situated not far from El Mzerib (on the
caravan route from Damascus to Mekka) was recently attacked by
predatory Bedouin tribes. The settlers were all driven away,
their gardens and crops destroyed. Even a road built by the
Jews to connect their frontier colony with older ones in
Galilee, west of the river, was at least partially
obliterated. Taxes are more oppressive than ever, officials
are corrupt, and prohibitive measures regarding immigration
are still in force, although inadequate. I think, however, I
am justified in saying that the prospects are brighter than
ever for the Jews in Palestine and for Palestine itself.
European influence has obtained a foothold in the country, and
the tide of modern ideas can not be long debarred. Only four
or five weeks ago, an English company announced its
 determination to build a broad-gauge railway from the sea at
Haifa through the very heart of Samaria and Galilee to
Damascus and on to Bagdad, and active operations have already
commenced."

G. B. Ravndal,
United States Consul at Beirut
(United States Consular Reports, April, 1899, page 691).

{286}

JEWS: A. D. 1901.
Turkish order regulating visits to Palestine.

A Press telegram from Washington, February 16, 1901, states

that "Consul Merrill, at Jerusalem, has reported to the State
Department that the Turkish Minister of the Interior at
Constantinople has issued an order relative to Jews who visit
Palestine, which went into effect on January 29. The order
applies to an Jews who come to Palestine from other countries
as pilgrims or visitors. The conditions of the order are as
follows: On arriving at Joppa the visitor must deliver his
passport to the Turkish authorities and receive therefor a
Turkish document. The visitor is allowed to stay in the
country three months, when he must leave, surrendering the
Turkish permit and receiving his own. Foreign consuls are to
compel the Jews who overstay the three months' period to leave
Turkey."

----------JEWS: End--------

JOAN OF ARC, The Beatification of.

The beatification of Joan of Are, recommended by the

Congregation of Rites, at Rome, was pronounced by the Pope,
January 28, 1894.
JOHANNESBURG: Origin.

See (in this volume)

SOUTH AFRICA (THE TRANSVAAL): A. D. 1885-1890.

JOHANNESBURG: A. D. 1895-1896.
Revolutionary conspiracy of Uitlanders.

See (in this volume)

SOUTH AFRICA (THE TRANSVAAL): A. D. 1895-1896.

JOHANNESBURG: A. D. 1900.
Taken by the British forces.

See (in this volume))

SOUTH AFRICA (THE FIELD OF WAR): A. D. 1900 MAY-JUNE).

JOINT HIGH COMMISSION, Anglo-American.

See (in this volume)

CANADA: A. D. 1898-1899.

JOLO, The Sultan of.

See (in this volume)

PHILIPPINE ISLANDS: A. D. 1899 (MAY-AUGUST).

JONES, Samuel M., Mayor of Toledo.

See (in this volume)

TOLEDO, OHIO: A. D. 1899-1901.

JOUBERT, General Pietrus Jacobus:

In the South African War.

See (in this volume)

SOUTH AFRICA (THE FIELD OF WAR):
 A. D. 1899 (OCTOBER-DECEMBER).

JOUBERT, General Pietrus Jacobus:

Death.

See (in this volume)

SOUTH AFRICA (THE FIELD OF WAR): A. D. 1900 (MARCH).

JUBILEE, The Diamond, of Queen Victoria.

See (in this volume)

ENGLAND: A. D. 1897 (JUNE).

JUBILEE OF THE HOLY YEAR 1900, Proclamation of the Universal.

See (in this volume)

PAPACY: A. D. 1900-1901.

JU JU SACRIFICE.

See (in this volume)

NIGERIA: A. D. 1807.

K.

KAFIRISTAN: Its conquest by the Afghans.

See (in this volume)

AFGHANISTAN: A. D. 1896.

KAGAYAN, or CAGAYAN, The American acquisition of.

See (in this volume)

UNITED STATES OF AMERICA: A. D. 1898 (JULY-DECEMBER).

KAIRWAN: Opened to tourists.

 See (in this volume)
TUNIS: A. D. 1881-1898.

KAISER WILHELM II.

See (in this volume)

GERMANY.

KAISER WILHELM SHIP CANAL, The.

See (in this volume)

GERMANY: A. D. 1895 (JUNE).

KAMERUNS, The: Cost of maintenance.

See (in this volume)

GERMANY: A. D. 1809 (JUNE).

KANG YEU-WEI, Chinese reformer.

See (in this volume)

CHINA: A. D. 1898 (JUNE-SEPTEMBER), and after.

KAPILAVASTU, Discovery of the ruins of.

See (in this volume)

BUDDHA.

KARNAK, Fall of eleven columns of the temple of.

See (in this volume)

ARCHÆOLOGICAL RESEARCH: EGYPT: FALL OF KARNAK
COLUMNS.

KASSALA, Italian evacuation of.

See (in this volume)

 ITALY: A. D. 1897.

KATIPUNAN, The.

See (in this volume)

PHILIPPINE ISLANDS: A. D. 1896-1898.

KEARSARGE, Loss of the.

The United States cruiser Kearsarge, destroyer of the

Alabama, was totally wrecked, February 2. 1894, on
Roncadore Reef, off the Mosquito coast, her crew being
saved.

KENGI.

See (in this volume)

ARCHÆOLOGICAL RESEARCH: BABYLONIA: AMERICAN
EXPLORATION.

KENTUCKY: A. D. 1895-1900.
Political conflicts.
Assassination of Governor Goebel.

In 1895 a Republican Governor, William O. Bradley, was elected

in Kentucky by a majority of nearly 9,000 votes. In 1896 the
conflict of political parties became fierce and dangerous, on
the occasion of the election of au United States Senator to
succeed the Democratic incumbent, J. C. S. Blackburn, whose
term would expire March 3d, 1897. On joint ballot in the
Legislature the Republicans and Democrats had 68 votes each,
and the Populists had 2,—the latter thus bolding a balance of
power: But the two Populist members were divided, and the
Democrats could not act together, owing to the division in
their party on the money question. The "sound-money" Democrats
refused support to Senator Blackburn, who obtained the caucus
nomination of his party for re-election, and their votes were
 scattered. The Republicans were united on a candidate, and
secured one of the Populist votes, but needed one more to give
them a majority. They attempted to win the needed vote by
unseating a Democrat in the Lower House whose seat was
contested; but the Democrats promptly neutralized their move
by unseating two Republicans in the Upper House. The passions
excited by the factious contest had by this time become so
violent and threatening that in March, 1897, the Governor of
the State deemed it necessary to call out several companies of
militia to preserve peace at Frankfort. In the end, the
Legislature adjourned without electing an United States
Senator; but a special session was called and the election
accomplished, on the 28th of April, William J. Deboe,
Republican, winning the senatorial seat.

{287}

In the following year (1898) the Democrats secured strong

majorities in both branches of the Legislature, and, under the
lead of Senator William Goebel, passed an election bill which was
bitterly denounced as a contrivance for fraud. It created a
State election board, appointed by the existing Legislature
for four years, which board should name three commissioners in
each county, by whom all election and registration officers
should be chosen. Notwithstanding this provision of partisan
returning officers, the Democrats were so divided on the
silver question in the gubernatorial election of 1899, and
further weakened by personal hostilities which Goebel, who
became their candidate for governor, had stirred up, that the
official returns of the election gave William S. Taylor, the
Republican candidate, a plurality of more than 2,000 votes
over Goebel. There had been fear of riot in Louisville on
election day, and the Governor had called out State troops to
preserve order. The defeated party claimed that military
interference in that city had made the election illegal, and
demanded that the returns from Louisville should be thrown
out. On both sides there were accusations of fraud, and a
dangerous state of political excitement ensued again. But two
of the three members (all Democrats) of the State Board of
Election Commissioners decided that Taylor, the Republican
candidate, had been lawfully elected, and he was inaugurated
Governor on the 12th of December. Goebel and his partisans,
refusing to accept the decision, determined to unseat Governor
Taylor, by authority of the Legislature, in which they
controlled a considerable majority of votes.

The Legislature met and organized on the 1st of January, 1900.

The Governor prepared to defend his possession of the office
by summoning troops of the State Guard from the strong
Republican districts of the mountain region, and 1,000 or more
armed men arrived in Frankfort on the 25th. There had been
fighting between the two parties already, and the situation
now became desperately strained. Some kind of a bloody outcome
seemed inevitable, but no one could anticipate the barbarous
tragedy which ensued. As Senator Goebel was walking to the
state house, on the 30th of January, he was shot from one of
its windows, by a hidden assassin, receiving a wound from
which he died February 3d. The Legislature at once closed its
investigation of the election, and voted to recognize the
dying William E. Goebel as Governor, with J. C. W. Beckham as
his Lieutenant and the successor to the office in the event of
his death. Governor Taylor issued an address to the people of
the State, denouncing the murder and enjoining the
preservation of order. At the same time he proclaimed an
adjournment of the Legislature, closed the State House against
it, and summoned its members to reassemble on the 6th of
February, not at Frankfort, but at the distant small mountain
town of London. Goebel, on his death-bed, took the oath of
office, and issued orders dismissing Governor Taylor's
Adjutant-General, appointing another in his place, and
commanding the force at Frankfort to return to their homes.

The President of the United States was applied to by Governor

Taylor for recognition and support, but decided that he had no
authority to interfere. The supporters of Goebel applied with
more effect to the Circuit Court of Kentucky, which issued a
writ enjoining Governor Taylor from the use of armed force to
prevent the Legislature from meeting. A clerk who succeeded in
serving the writ by tacking it on the door of the Governor's
office was seized and held prisoner by the military, and a
writ of habeas corpus requiring his deliverance was disobeyed
for several days. All authority was breaking down, and a state
of political chaos being produced. To save the State from
actual anarchy and civil war, a conference of leaders in both
parties was held at Louisville, February 5, and an agreement
reached to withdraw troops from the capital, allow the
Legislature to meet there, and abide by its action, with
promise to repeal the obnoxious election law. Governor Taylor
refused acceptance of the agreement. He dismissed the troops,
however, on the 12th, and called the Legislature to meet at
the capital. The Democratic members of that body were holding
meetings at Louisville, the Republican members at London. The
latter obeyed the call to Frankfort, while the former
continued at Louisville, both fragments claiming to be the
Legislature of the State. A petition to the United States
Circuit Court, for injunctions against the Democratic
claimants for certain of the minor State offices, was denied
by Judge Taft on the 14th.

On the 21st, Republican and Democratic leaders came to another

agreement, that the gubernatorial question should be settled
in the courts,—first in those of the State, and then carried
by appeal to the Supreme Court of the United States. This
agreement prevailed, and the case, as between Governor Taylor
and Governor Beckham (declared to be Governor by a majority of
the members of the Legislature after Governor Goebel's death)
was peacefully adjudicated in favor of the latter. The Circuit
Court of the State recognized the Legislature's decision of
the election as final; the Court of Appeals, with only one of
three Republican judges dissenting, did the same, April 6. On
April 30 the case was argued, on appeal, before the Supreme
 Court of the United States, and on the 21st of May that
tribunal decided that it had no jurisdiction. This ended
attempts to dispute the authority of Governor Beckham.

Strenuous efforts were being made to implicate his competitor,

Mr. Taylor, as accessory to the murder of Goebel. Several
persons had been arrested and put on trial for that crime,
including Caleb Powers, the Secretary of State in Governor
Taylor's fallen government, from the window of whose office it
was claimed that the cowardly shot had been fired. The trials
were scandalized by confessions of perjury and charges and
counter-charges of subornation on the part of witnesses. In
August, Powers was found guilty and sentenced to imprisonment
for life. Subsequently, Henry E. Youtsey received the same
sentence, while James Howard was condemned to death. Appeals
were taken in each case. Mr. Taylor, under indictment as an
accomplice, had left the State, and a requisition for his
rendition was refused by the Governor of Indiana, where he
sojourned. He indignantly denied all knowledge of the alleged
conspiracy to kill his competitor, but claimed that a fair
trial could not be secured to him if he was placed in the
power of his political enemies.

{288}

In October, a new election law was passed by the Legislature

and signed by the Governor. It provides that, of the three
State Election Commissioners, one is to be taken from each of
the dominant parties, upon the recommendation of the State
Central Committee, and the Clerk of the Court of Appeals, an
elective officer, is to act as umpire. The Commissioners are
to be appointed by the Governor. They are to appoint the
county boards, one from each party, with the Sheriff as
umpire. All the boards are to have only ministerial powers,
and the law gives the right of appeal in all cases of contests
to the courts except in the case of Governor and
Lieutenant-Governor, which must be tried by the Legislature,
 as the constitution prescribes. The Goebel law made the boards
supreme. The new law also provides for an equitable division
of election officers.

KHAIBAR:
Inclusion in a new British Indian province.

See (in this volume)

INDIA: A. D. 1901 (FEBRUARY).

KHALIFA, The.

See (in this volume)

EGYPT: A. D. 1885-1896; 1897-1898; and 1899-1900.

KHARTUM, Destruction of.

See (in this volume)

EGYPT: A. D. 1885-1896.

KHARTUM, Gordon Memorial College.

See (in this volume)

EGYPT: A. D. 1898-1899.

KIANG-HUNG: Cession to France.

See (in this volume)

CHINA: A. D. 1894-1895 (MARCH-JULY).

KIAO-CHAU: A. D. 1897.
Seizure by Germany.

See (in this volume)

CHINA: A. D. 1897 (NOVEMBER).

KIAO-CHAU: A. D. 1899.