Chap06 Test Bank

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Macroeconomics, 3e (Williamson)Chapter6

Economic Growth: Malthus and Solow

1)

If changes in economic policy could cause the growth rate of real GDP to increase by 1% peryear for 100 years, then GDP would be ________ % higher after 100 years than it would havebeen otherwise.

A)

1.3B)

2.0C)

2.7D)

3.8Answer:

CQuestion

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Previous Edition

2)

In an exogenous growth model, growth is caused byA)

capital accumulation.B)

government policies.

C)

human capital accumulation.D)

forces that are not explained by the model itself.Answer:

D



Question

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Previous Edition

3)

The idea that an improvement in technology causes an increase in population but causes noincrease in the average standard of living is attributed to

A)

Adam Smith.B)

Thomas Malthus.C)

Robert Solow.D)

Milton Friedman.Answer:

BQuestion

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Previous Edition

4)

The Malthusian model performs poorly in explaining economic growth after theA)

French Revolution.B)

American Revolution.C)

Industrial Revolution.D)

Bio-technology Revolution.Answer:

CQuestion

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Previous Edition



5)

The Solow model emphasizes the role of which of the following factors of production?A)

landB)

laborC)

capitalD)

natural resourcesAnswer:

CQuestion

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Previous Edition



6)

Before the Industrial Revolution, standards of living differedA)

greatly over time and across countries.B)

little over time, but differed greatly across countries.C)

greatly over time, but differed little across countries.D)

little over time and across countries.Answer:

DQuestion

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Previous Edition

7)

Recent evidence suggests that output per worker isA)

positively related to both the rate of investment and to the rate of population growth.B)

positively related to the rate of investment and negatively related to the rate of populationgrowth.

C)

negatively related to the rate of investment and positively related to the rate of populationgrowth.

D)

negatively related to both the rate of investment and to the rate of population growth.

Answer:

BQuestion

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Previous Edition

8)

There is evidence that income per worker is converging in



A)

the richest countries and the poorest countries.B)

the richest countries, but not the poorest countries.C)

the poorest countries, but not the richest countries.D)

neither the richest nor the poorest countries.Answer:

BQuestion

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Previous Edition

9)

Conditional convergence means thatA)

the distance between poor and rich countries increases.B)

the distance between poor and rich countries stays the same.

C)

the distance between poor and rich countries decreases.D)

there is no systematic pattern in how poor and rich countries grow.Answer:

CQuestion

Status:

New

10)

For conditional convergence to hold, it is required thatA)

poor countries grow.B)



poor countries grow faster and faster.C)

poor countries grow faster than rich countries.D)

poor countries become richer than currently rich countries.Answer:

CQuestion

Status:

New

11)

Conditional convergence means thatA)

poorer countries have higher growth rates.B)

poorer countries have lower growth rates.C)

poorer countries have very diverse growth rates.D)

poorer countries have uniform growth rates.Answer:

AQuestion

Status:

New



12)

In the Malthusian model, the population growth rate isA)

exogenous.B)

positively related to consumption per worker.C)

negatively related to consumption per worker.D)

assumed to be constant.Answer:

BQuestion

Status:

Previous Edition

13)

The Malthusian model emphasizes fixity in which of the following factors of production?A)

laborB)

landC)

energyD)

none of the aboveAnswer:

BQuestion

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Previous Edition

14)

In the Malthusian model, an improvement in the technology of growing food is likely toA)



increase the equilibrium size of the population and increase the equilibrium level of consumption per worker.

B)

increase the equilibrium size of the population and decrease the equilibrium level of consumption per worker.

C)

increase the equilibrium size of the population and have no effect on the equilibrium level of consumption per worker.

D)

have no effect on the equilibrium size of the population and increase the equilibrium level of consumption per worker.

Answer:

CQuestion

Status:

Previous Edition

15)

The Malthusian model predicts thatA)

population will keep increasing.B)

the standard of living will keep increasing.C)

health improvements increase the standard of living.D)

population control improves the standard of living.Answer:

D

QuestionStatus:

New

16)

In a Malthusian world, why is misery recurrent?A)

The marginal returns of capital are decreasing.



B)

Fertility is endogenous.C)

Output is increasing in labor.D)

Mortality depends on the standard of living.Answer:

DQuestion

Status:

New

17)

In a Malthusian world, what would improve the standard of living permanently?A)

a warB)

a new medical drugC)

birth control

D)

democracyAnswer:

CQuestion

Status:

New



18)

In a Malthusian world, what would improve the standard of living temporarily?A)

a warB)

a new virusC)

birth controlD)

democracyAnswer:

AQuestion

Status:

New

19)

In the Malthusian model, state-mandated population control policies are likely toA)

decrease the equilibrium size of the population and increase the equilibrium level of consumption per worker.

B)

decrease the equilibrium size of the population and have no effect on the equilibrium levelof consumption per worker.

C)

have no effect on the equilibrium size of the population and increase the equilibrium level of consumption per worker.

D)

have no effect on either the equilibrium size of the population or the equilibrium level of consumption per worker.Answer:

AQuestion

Status:

Previous Edition

20)



In the Malthusian model, improvements in health care lead toA)

higher population and higher per-capita production.B)

higher population and lower per-capita production.C)

lower population and higher per-capita production.D)

lower population and lower per-capita production.Answer:

BQuestion

Status:

New

21)

If an epidemic hits a Malthusian economy, the immediate consequence isA)

an increase in the standard of living.B)

a reduction in the standard of living.C)

no change in the standard of living.D)

dependent on the population growth rate.Answer:

A

QuestionStatus:

New

22)

If an epidemic hits a Malthusian economy, the long-term consequence isA)

an increase in the standard of living.



B)

a reduction in the standard of living.C)

no change in the standard of living.D)

dependent on the population growth rate.Answer:

CQuestion

Status:

New

23)

In a Malthusian world, what events would improve temporarily the standard of living, asmeasured by output per capita?

A)

a peace keeping missionB)

an increase in violent crimeC)

a new mutation of germsD)

a new sewer systemAnswer:

BQuestion

Status:

New



24)

In a Malthusian world, what events would improve permanently the standard of living, asmeasured by output per capita?

A)

a peace keeping missionB)

an increase in violent crimeC)

a new mutation of germsD)

a new sewer systemAnswer:

CQuestion

Status:

New

25)

In more modern times as opposed to the times of Malthus, higher standards of living appearto

A)

decrease death rates and increase birth rates.B)

decrease death rates and also decrease birth rates.C)

decrease death rates and have no effect on birth rates.D)

have had effects on neither death rates nor birth rates.

Answer:

BQuestion

Status:

Previous Edition

26)

Malthus was too pessimistic because he did not foresee the effects of



A)

ever increasing amounts of land for cultivation.B)

increases in the capital stock and the effects of such increases on production.C)

improved nutrition and health care.D)

improved family planning practices.Answer:

BQuestion

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Previous Edition

27)

The Solow residual attempts to measure the amount of output not explained byA)

technological progress.B)

the direct contribution of labor and capital.

C)

economic projections.D)

the amount of a nation's human capital.Answer:

BQuestion

Status:

Previous Edition

28)

Growth accounting, popularized by Robert Solow, attempts to attribute a change inaggregate output

A)

to its most important single cause.



B)

separately between changes in government policy and changes in total factor productivity.C)

separately between changes in total factor productivity and changes in the supplies of factors of production.

D)

separately between changes in the supplies of factors of production and changes ingovernment policy.

Answer:

CQuestion

Status:

Previous Edition



29)

For the production function, Y = zK 0.36N0.64, if measured output is, Y measured capital

input is ˆ K , and measured labor input is ˆ N , then the Solow residual would be equal to

A)

0.36 0.64ˆ ˆ

ˆ

K N

Y

.

B)

0.36

0.64

ˆ

ˆ

K

N

× Y .

C)

0.64

0.36

ˆ

ˆ

N

K

× ˆY .

D)

0.36 0.64

ˆ

ˆ ˆ

Y

K N

.

Answer:

DQuestion

Status:

Previous Edition

30)

All of the following increase total factor productivity exceptA)

new inventions.B)

more capital.C)

new management techniques.D)

favorable changes in government regulations.Answer:

BQuestion

Status:



Previous Edition

31)

Which of the following increases total factor productivity?A)

investment in machineryB)

a harsh winterC)

better access to creditD)

new production proceduresAnswer:

DQuestion

Status:

New

32)

Growth in the Solow residual was slowest in theA)

1950s.B)

1960s.C)

1970s.D)

1980s.

Answer:

CQuestion

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Previous Edition

33)

Growth in the Solow residual was fastest in the



A)

1950s.B)

1960s.C)

1970s.D)

1980s.Answer:

BQuestion

Status:

Previous Edition



34)

One plausible explanation of the U.S. productivity slowdown starting in 1973 is that it is anartifact of mismeasurement. This explanation would require that production of

A)

goods is underestimated.B)

goods is overestimated.C)

services is underestimated.D)

services is overestimated.Answer:

CQuestion

Status:

Previous Edition

35)

One plausible explanation of the U.S. productivity slowdown starting in 1973 is that it was aresult of the increase in the relative price of energy. This explanation would require that, inlight of higher energy costs, the

A)

capital stock is overestimated.B)

capital stock is underestimated.C)

labor force is overestimated.D)

labor force is underestimated.Answer:

AQuestion

Status:

Previous Edition

36)One plausible explanation of the U.S. productivity slowdown starting in 1973 is that it was



the result of the time needed to adapt to new technology. This explanation would requirethat

A)

workers withdraw from the labor force to learn about the new technology.B)

a large number of new entrants be attracted to the labor force.C)

managers be reluctant to adopt changes.D)

workers time at their jobs be diverted from production to learning the technology.Answer:

DQuestion

Status:

Previous Edition

37)

Percentage deviations from trend in the Solow residual areA)

unrelated to the business cycle.B)

procyclical and smaller than percentage deviations from trend in GDP.C)

procyclical and have about equal magnitude as percentage deviations from trend in GDP.D)

procyclical and larger than percentage deviations from trend in GDP.Answer:

C Question

Status:

Previous Edition

38)

The biggest contribution to real U.S. GDP growth in the 1970s was due to growth inA)



total factor productivity.B)

the capital stock.C)

the labor force.D)

both the capital stock and the labor force.Answer:

DQuestion

Status:

Previous Edition



39)

The biggest contribution to real GDP growth in the "East Asian Tigers" during the period1966-1991 was due to growth in

A)

total factor productivity.B)

the capital stock.C)

the labor force.D)

international trade.Answer:

BQuestion

Status:

Previous Edition

40)

The per-worker production function relates output per workerA)

to capital per worker.

B)

to the participation rate.C)

to production per worker.D)

in different countries.Answer:

AQuestion

Status:

Previous Edition

41)

We can express the per-worker production function as a function of only per-worker capitalthanks to



A)

the decreasing marginal return of capital.B)

the decreasing marginal return of labor.C)

the constant returns to scale.D)

the impatience of households.Answer:

CQuestion

Status:

New

42)

The slope of the output per worker function is equal to theA)

marginal product of capital.B)

marginal product of labor.

C)

savings rate.D)

growth rate of the population.Answer:

AQuestion

Status:

Previous Edition

43)

In Solow's model of economic growth, suppose that s represents the savings rate, z represents total factor productivity, k represents the level of capital per worker, and f(k) represents the per-worker production function. Also suppose that n represents thepopulation growth rate and d represents the depreciation rate of capital. The equilibriumlevel of capital per worker, k *, will satisfy the equation

A)



szf(k*) = (n + d)k*.

B)

= (n + d )f (k*).

C)

nf(k *) =*

( )

sk

s d +.

D)

f (k*) =( )

s

n d +k *.

Answer:

AQuestion

Status:

Previous Edition



44)

The saving rate has the following characteristic in Solow's exogenous growth modelA)

it increases with output.B)

it first decreases, then increases with output.C)

it first increases, then decreases with output.D)

it is constant.Answer:

DQuestion

Status:

New

45)

In Solow's exogenous growth model, the principal obstacle to continuous growth in outputper capita is due to

A)

the declining marginal product of labor.

B)

the declining marginal product of capital.C)

limits in the ability of government policymakers.D)

too little savings.Answer:

BQuestion

Status:

Previous Edition

46)

In Solow's exogenous growth model, the economy reaches a stable steady state becauseA)



the marginal return of capital is decreasing.B)

capital is growing at a constant rate.C)

the substitution effect is stronger than the income effect.D)

conditional convergence holds.Answer:

AQuestion

Status:

New

47)

In the steady state of Solow's exogenous growth model, an increase in the savings rateA)

increases output per worker and increases capital per worker.B)

increases output per worker and decreases capital per worker.C)

decreases output per worker and increases capital per worker.D)

decreases output per worker and decreases capital per worker.Answer:

AQuestion

Status:

Previous Edition

48)

Which of the following is not a feature of the steady state in Solow's exogenous growthmodel?

A)

The capital/output ratio is steady.B)



Capital grows continuously.C)

Consumption per worker is steady.D)

Total saving is steady.Answer:

DQuestion

Status:

New

49)

If the population growth rate increases by the same percentage points as the depreciationrate, what happens to the steady-state, per-worker output in Solow's exogenous growthmodel?

A)

It increases.B)

It decreases.C)

It does not change.D)

It cannot exist anymore.Answer:

BQuestion

Status:

New



50)

If the population growth rate increases by the same percentage points as the depreciationrate decreases, what happens to the steady-state, per-worker consumption in Solow'sexogenous growth model?

A)

It increases.B)

It decreases.C)

It does not change.D)

It cannot exist anymore.Answer:

CQuestion

Status:

New

51)

In Solow's exogenous growth model, the steady-state growth rate of capital can beincreased by

A)

higher population growth.B)

higher depreciation rate.C)

higher saving rate.D)

higher interest rate.Answer:

AQuestion

Status:

New

52) The Golden Rule of capital accumulation maximizes the steady-state level of



A)

output per worker.B)

capital per worker.C)

consumption per worker.D)

investment per worker.Answer:

CQuestion

Status:

Previous Edition

53)

In the Golden Rule steady state, the marginal product of capital is equal to theA)

savings rate plus the population growth rate.B)

population growth rate plus the depreciation rate.

C)

depreciation rate plus the savings rate.D)

savings rate divided by the marginal product of labor.Answer:

BQuestion

Status:

Previous Edition

54)

With the Golden Rule,A)

savings maximize output.B)



savings maximize consumption.C)

savings minimize costs.D)

savings optimize the population level.Answer:

BQuestion

Status:

New

55)

The Golden Rule says thatA)

one should save as much as possible.B)

one should save as little as possible.C)

one should save something between A and B.D)

savings are irrelevant.Answer:

CQuestion

Status:

New



56)

In the steady state of Solow's exogenous growth model, an increase in the growth rate of labor force

A)




decreases output per worker and decreases capital per worker.Answer:

DQuestion

Status:

Previous Edition

57)

In the steady state of Solow's exogenous growth model, an increase in total factorproductivity

A)




decreases output per worker and decreases capital per worker.

Answer:

AQuestion

Status:

Previous Edition

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