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| 1 | |
Labor productivity |
| | A) | is also called the marginal product of labor |
| | B) | is defined as Y/N |
| | C) | declines as more capital is added to the production process |
| | D) | is the same as total factor productivity |
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| 2 | |
If we have a Cobb-Douglas aggregate production function, the term of “constant returns to scale” refers to the fact that |
| | A) | the share of capital in production is always equal to the share of labor in production |
| | B) | the marginal product of capital is always equal to the marginal product of labor |
| | C) | the share of capital in production and the share of labor in production add up to one |
| | D) | total factor productivity is equal to one |
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| 3 | |
The Solow residual measures changes in |
| | A) | total factor productivity |
| | B) | labor productivity |
| | C) | the marginal product of capital |
| | D) | the cost of production |
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| 4 | |
If we assume a Cobb-Douglas production function where the share of capital is equal to 0.2 and the share of labor is equal to 0.8, then the marginal product of labor is equal to |
| | A) | Y/N |
| | B) | 5Y/4N |
| | C) | 4Y/5N |
| | D) | Y/4N |
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| 5 | |
If we assume a Cobb-Douglas production function where the share of labor is 3/4 and the share of capital is 1/4, then the marginal product of capital can be calculated as |
| | A) | 3Y/4K |
| | B) | Y/4K |
| | C) | 4Y/K |
| | D) | Y/K |
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| 6 | |
Assume a Cobb-Douglas production function where the share of capital 1/4 and the share of labor is each 3/4. If the growth in total factor productivity is zero and labor and capital each grow by 1%, then |
| | A) | output growth is 2% and the marginal product of capital is Y/4K |
| | B) | output growth is 1% and the marginal product of capital is Y/K |
| | C) | output growth is 2% and the marginal product of labor is Y/4N |
| | D) | output growth is 1% and the marginal product of labor is (3Y)/(4N) |
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| 7 | |
Assume a production function with constant returns to scale. The share of capital in production is 1/4 and the share of labor is 3/4. If both labor and capital grow at 1.6% and real output grows at a rate of 2.8%, what is the growth rate of total factor productivity? |
| | A) | 2.8% |
| | B) | 1.6% |
| | C) | 1.2% |
| | D) | 1.0% |
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| 8 | |
Assume a Cobb-Douglas aggregate production function in which labor's share of income is 0.7 and capital’s share of income is 0.3. At what rate will real output grow if labor grows at 2.0%, the capital stock grows at 1.0%, and total factor productivity increases by 1.8%? |
| | A) | 4.8% |
| | B) | 3.5% |
| | C) | 3.0% |
| | D) | 1.8% |
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| 9 | |
In the neoclassical growth model, a decrease in the savings rate |
| | A) | raises the growth rate of output per capita |
| | B) | lowers the growth rate of output per capita |
| | C) | raises the steady-state capital-labor ratio |
| | D) | lowers the steady-state capital-labor ratio |
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| 10 | |
In the neoclassical growth model, an increase in the savings rate will |
| | A) | increase the long-run growth in income per capita |
| | B) | decrease the long-run capital-labor ratio |
| | C) | increase the growth rate of output temporarily but not affect its long-run trend |
| | D) | decrease the growth rate of output, but only temporarily |
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| 11 | |
In the neoclassical growth model, a decrease in the rate of population growth will |
| | A) | decrease the growth rate of output |
| | B) | decrease the level of output per capita |
| | C) | decrease the steady-state capital-labor ratio |
| | D) | all of the above |
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| 12 | |
In a neoclassical growth model, if the capital-labor ratio (k) is higher than the steady-state level (k*), we should expect that |
| | A) | gross investment is more than what is required to keep the capital-labor ratio constant |
| | B) | output per capita will increase but only temporarily |
| | C) | output per capita will decrease |
| | D) | there will be a temporary increase in growth until the capital-labor ratio returns back to its steady-state level |
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| 13 | |
An economy in a steady-state equilibrium can achieve a new steady-state equilibrium at a higher capital-labor ratio if |
| | A) | the savings rate increases |
| | B) | the rate of depreciation decreases |
| | C) | the rate of population growth decreases |
| | D) | all of the above |
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| 14 | |
In the neoclassical growth model, a one-time increase in technology will |
| | A) | increase the growth rate of output |
| | B) | shift the investment requirement line up |
| | C) | increase the steady-state capital-labor ratio |
| | D) | all of the above |
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| 15 | |
In a neoclassical growth model which of the following affects a nation's long-term growth rate? |
| | A) | the savings rate |
| | B) | the rate of population growth |
| | C) | the rate of depreciation |
| | D) | both A. and B. |
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| 16 | |
The idea of a steady state is that |
| | A) | total output remains constant |
| | B) | output per capita grows at a constant rate |
| | C) | output, capital, and labor all grow at the same rate |
| | D) | output grows at a rate equal to the savings rate |
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| 17 | |
In the neoclassical growth model, the steady-state capital-labor ratio is determined by the equation |
| | A) | k = sy/(n + d) |
| | B) | k = sy(n + d) |
| | C) | k = sy(n - d) |
| | D) | k = (n - d)/sy |
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| 18 | |
In the neoclassical growth model, a steady-state equilibrium is reached if the following equation is satisfied |
| | A) | sy = k/(n + d) |
| | B) | sy = (n + d) |
| | C) | sy = (n - d)k |
| | D) | sy = (n + d)k |
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| 19 | |
In a neoclassical growth model, steady-state consumption is maximized when the marginal increase in the capital-labor ratio (k) produces just enough extra output per capita (y) that the marginal product of k is equal to |
| | A) | (n + d) |
| | B) | s/(n + d) |
| | C) | sy/(n + d) |
| | D) | s - (n + d) |
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| 20 | |
Steady-state consumption is defined as |
| | A) | y* – (n + d) |
| | B) | y* – s(n + d) |
| | C) | f(k*) – (n + d)k* |
| | D) | k* - (n + d) |
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