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| 1 | |
If we have a production function with constant returns to scale for capital alone, |
| | A) | there can never be an advance in technology |
| | B) | output cannot be increased if labor is substituted for capital |
| | C) | output cannot be increased if more capital is employed |
| | D) | output will more than double if the level of all inputs is doubled |
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| 2 | |
Constant returns to scale for capital alone implies that |
| | A) | as both capital inputs and labor inputs are doubled, output will more than double |
| | B) | as both capital inputs and labor inputs are doubled, output will less than double |
| | C) | as both capital inputs and labor inputs are doubled, output will double |
| | D) | as capital inputs are doubled, output will less than double |
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| 3 | |
The concept of diminishing marginal product implies that |
| | A) | output can only increase if all inputs are increased proportionally |
| | B) | output will increase but at a decreasing rate if one input is increased while all other inputs are held constant |
| | C) | output will increase but at a decreasing rate if all inputs are increased proportionally |
| | D) | output cannot increase if one input is increased while other inputs are kept constant |
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| 4 | |
Paul Romer's notion of social returns to capital implies that |
| | A) | the contribution of any new knowledge will not just go to the producer of new knowledge but be shared by others as well |
| | B) | new capital investments have a bigger impact on growth if the owners of capital share their newfound wealth with the poor |
| | C) | investment in real capital benefits society as a whole while investment in human capital only benefits those who invest in themselves |
| | D) | investment in real capital has a bigger impact on labor productivity than investment in human capital |
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| 5 | |
The distinction between private and social returns to capital is important since |
| | A) | policy makers want to know how much the government can gain from capital investments |
| | B) | capital investments cannot be undertaken profitably unless subsidized by the government |
| | C) | capital investments often have important spillover effects |
| | D) | capital investment increases labor productivity |
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| 6 | |
Assume an endogenous growth model with labor augmenting technology and a production function of the form Y = F(K,AN), with A = 2(K/N) such that y = 2k. If the rate of population growth is n = 0.03, the rate of depreciation is d = 0.04, and the savings rate is s = 0.08, the growth rate of output per capita is |
| | A) | 15% |
| | B) | 9% |
| | C) | 7% |
| | D) | 1% |
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| 7 | |
Assume an endogenous growth model with labor augmenting technology and a production function of the form Y = F(K,AN), with A = 2(K/N) such that y = 2k. If the rate of population growth is n = 0.04, the rate of depreciation is d = 0.05, and the savings rate is s = 0.10, the growth rate of output per capita is |
| | A) | 4% |
| | B) | 5% |
| | C) | 10% |
| | D) | 11% |
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| 8 | |
Assume an endogenous growth model with labor augmenting technology and a production function of the form Y = F(K,AN), with A = 1.5(K/N) such that y = 1.5k. If the rate of population growth is n = 0.03, the rate of depreciation is d = 0.04, and the savings rate is s = 0.08, the growth rate of output per capita is |
| | A) | 3% |
| | B) | 4% |
| | C) | 5% |
| | D) | 8% |
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| 9 | |
Assume an endogenous growth model with labor augmenting technology and a production function of the form Y = F(K,AN), with A = 1.2(K/N) such that y = 1.2k. If the rate of population growth is n = 0.03, the rate of depreciation is d = 0.05, how large would the savings rate (s) have to be to achieve a per-capita growth rate of output of 4 percent? |
| | A) | 12% |
| | B) | 10% |
| | C) | 8% |
| | D) | 4% |
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| 10 | |
In a simple endogenous growth model where technology is proportional to the level of capital per worker, that is, A = a(K/N) = ak, and with an aggregate production function of Y = F(K,AN), the growth rate of GDP per capita can be expressed by the equation |
| | A) | Δy/y = sa + (n + d) |
| | B) | Δy/y = sa + (n + d)k |
| | C) | Δy/y = sa - (n + d)k |
| | D) | Δy/y = sa - (n + d) |
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| 11 | |
Assume an aggregate production function with a constant marginal product of capital and with capital as the only factor of production, such that Y = aK. If there is neither population growth nor depreciation of capital, the growth rate of per-capita output is |
| | A) | ΔY/Y = sa |
| | B) | ΔY/Y = sa + (n - d) |
| | C) | ΔY/Y = sa + (n + d) |
| | D) | ΔY/Y = sa/(n + d) |
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| 12 | |
If we have an aggregate production function of the form Y = aK, at what capital-labor ratio can a steady-state equilibrium be reached? |
| | A) | k = sy/(n + d) |
| | B) | k = sy + (n - d) |
| | C) | k = sa/(n + d) |
| | D) | never |
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| 13 | |
The idea that increased investment in research and development will enhance economic growth is |
| | A) | the key to linking higher savings rates to higher equilibrium growth rates |
| | B) | totally unproven |
| | C) | a crucial element of conditional convergence |
| | D) | an important part of the neoclassical growth model |
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| 14 | |
Empirical evidence that countries which devote a higher proportion of GDP to investment will reach a higher per capita income level but not a higher long-term growth rate was provided by |
| | A) | Paul Romer |
| | B) | Paul Samuelson |
| | C) | Robert Solow |
| | D) | Robert Barro |
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| 15 | |
A comparison of China's and India's income per capita and years of schooling from 1960 to 2000 indicates that |
| | A) | China's per capita income grew faster than India's |
| | B) | the human capital gap between the two countries has changed very little over time |
| | C) | other factors such as institutional change and openness to trade are also important for economic growth |
| | D) | all of the above |
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| 16 | |
Conditional convergence is predicted for two countries with the same population growth and access to the same technology. This means that they will eventually |
| | A) | reach the same income per capita and the same economic growth rate even if they have different savings rates |
| | B) | reach a different income per capita but the same economic growth rate even if they have different savings rates |
| | C) | reach the same income per capita and different economic growth rates if they have different savings rates |
| | D) | reach different income per capita levels and different economic growth rates if they have different savings rates |
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| 17 | |
The neoclassical growth model predicts conditional convergence for countries with the same population growth and access to the same technology if |
| | A) | one of these countries has a higher savings rate |
| | B) | one of these countries has a lower savings rate |
| | C) | both countries have the same savings rate |
| | D) | all of the above |
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| 18 | |
Endogenous growth theory predicts that countries will achieve higher economic growth rates if they manage to |
| | A) | lower their population growth |
| | B) | increase their savings rates |
| | C) | shield their industries from foreign competition |
| | D) | all of the above |
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| 19 | |
Which of the following is an important factor in achieving high living standards in a country? |
| | A) | a high savings rate |
| | B) | policies to encourage industries to compete in world markets |
| | C) | low population growth |
| | D) | all of the above |
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| 20 | |
Most of the economic growth of the four "Asian Tigers" between 1966 and 1990 came from |
| | A) | increases in inputs |
| | B) | increases in total factor productivity |
| | C) | reliance on a free market economy |
| | D) | access to natural resources |
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| 21 | |
The four "Asian Tigers" achieved their economic growth between 1966 and 1990 mostly through |
| | A) | population control |
| | B) | protection of domestic industries from foreign competition |
| | C) | hard work and sacrifice |
| | D) | a large degree of government intervention |
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