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26 Cards in this Set
- Front
- Back
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1. In the long run, by increasing total factor productivity, technological progress
a) reduces both the capital utilization rate and the level of employment b) creates unemployment c) prevents the economy from going into a steady state d) raises the steady-state capital stock e) reduces the capital-labor ratio |
d) raises the steady-state capital stock
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2. An increase in TFP
a) steepens the aggregate supply curve b) shifts the aggregate supply curve upward c) shifts the production function upward d) increases the rate of depreciation e) cannot occur once a steady state has been achieved |
c) shifts the production function upward
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3. Which of the following is not a measure of human capital?
a) fluency in a foreign language b) literacy c) willingness to take risks d) years of formal education e) on-the-job training |
c) willingness to take risks
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4. In which respect is human capital unlike physical capital?
a) human capital does not depreciate b) the stock of human capital cannot be increased c) human capital cannot be measured d) human capital does not affect output e) none of the above |
e) none of the above
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5. Increases in human capital
a) reduce the marginal product of labor b) increase the marginal product of physical capital c) are the by-product of technological innovations d) shift the economy’s production function downward e) are calculated as the difference between birth rates and death rates |
b) increase the marginal product of physical capital
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6. The most important effect of increased schooling on long run national output is that it
a) keeps teachers employed b) prevents students from being counted as unemployed c) increases human capital d) delays entry into the work force e) requires the production of more books and other supplies |
c) increases human capital
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7. If all other factors, including human capital, were the same, then compared with Europe,
the rate of return on investment in emerging market economies should be a) higher, signaling a greater need for new plants and equipment b) lower, due to a tradition of central planning c) less variable, reflecting less idiosyncratic risk d) approximately the same, reflecting competitive pressure e) indeterminate, because the emerging markets are not in equilibrium |
a) higher, signaling a greater need for new plants and equipment
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8. If human capital were the same in all countries
a) rates of return on investment would be the same in developed and less-developed countries b) industrial nations would invest in less-developed countries c) less developed countries would invest in the industrial nations d) industrial nations would continue to grow more rapidly than less-developed countries e) there would be no incentive for international trade |
b) industrial nations would invest in less-developed countries
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9. Generally speaking year of schooling are
a) Rising over time and higher in developed countries than developing b) Rising over time and higher in developing countries than developed c) Falling over time and higher in developed countries than developing d) Falling over time and higher in developing countries than developed e) Unchanged over time and higher in developed countries than developed |
a) Rising over time and higher in developed countries than developing
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10. Cultural and social forces, such as religious prohibitions on certain activities or
ethical norms regarding effort a) have no effect on economic output, and so are deliberately excluded from growth accounting b) are not captured in the production functions used for growth accounting c) are assumed to influence total factor productivity d) are measured as part of labor input e) are treated as ‘social capital’ in the production function |
c) are assumed to influence total factor productivity
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11. One of the main social factors that encourages economic development is
a) clearly defined property rights b) a system of price controls to eliminate inflation c) the separation of Church and State d) bilingualism e) freedom of speech and artistic expression |
a) clearly defined property rights
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12. Which of the following is not measured by the World Bank as an indicator of institutional
quality or governance? a) civil liberties b) political stability c) corruption d) government effectiveness e) income redistribution |
e) income redistribution
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13. Economic historians argue that an important trigger for the Industrial Revolution was
a) the focus on individual property rights emphasized in the Renaissance b) the strong emphasis on religious observance in the Middle Ages c) the large-scale discovery of silver in the Americas and the increase in European money supply that it created d) the creation of the first Central Bank e) the restoration of the monarchy in the UK |
a) the focus on individual property rights emphasized in the Renaissance
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14. Rent seeking behavior can affect economic growth because
a) it stimulates innovation b) it allows arbitrageurs to capture profits that would otherwise go unrealized c) it reduces the level of risk in the economy d) it provides an efficient use of land e) it shift labor away from entrepreneurial activity |
e) it shift labor away from entrepreneurial activity
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15. The historically slow development of the Chinese economy may be attributable to
a) geographical constraints b) it large markets c) rent-seeking d) the size of the labor force e) lack of usable natural resources |
c) rent-seeking
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16. Rent-seeking differs from entrepreneurship in that rent-seeking
a) is conducted for profit; entrepreneurship is not b) involves risk taking; entrepreneurship does not c) is a zero-sum game; entrepreneurship is not d) involves innovations; entrepreneurship does not e) is illegal; entrepreneurship is not |
c) is a zero-sum game; entrepreneurship is not
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17. Social capital includes
a) rent seeking b) corruption c) public infrastructure d) the internet e) civic mindedness |
e) civic mindedness
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18. A sudden technological advance will generally result in
a) higher output and lower investment b) higher output and higher investment c) higher output but no impact on investment d) no impact on output or investment e) lower output |
b) higher output and higher investment
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19. Generally speaking technological progress leads to higher output
a) purely because it raises the productivity of capital b) purely because it raises the steady-state capital stock c) because it raises both the productivity of capital and the steady state capital stock d) purely because it increase the capital stock for a given production function e) purely because it raises the output produced by a given capital stock |
c) because it raises both the productivity of capital and the steady state capital
stock |
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20. Developed economies need to engage in research and development more than do
developing economies because developed economies a) have greater capital depreciation rates b) have largely exhausted the gains from capital accumulation c) are inherently less innovative than developing economies d) need to exploit rent-seeking opportunities in order to continue growing e) have smaller workforces |
b) have largely exhausted the gains from capital accumulation
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21. Which of the following does not promote convergence between nations?
a) equal access to technology b) the existence of multinational enterprises c) foreign direct investment d) openness to foreign trade e) international patent protection |
e) international patent protection
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Suppose the economy has TFP = 10, there are 400 hours worked, and 60 unit of capital and
210 units of land the Cobb-Douglas production function is: Output = TFP x Hours^0.3 x Capital^0.3 x Land^0.2 22. Output is currently about a) 36,000 b) 600 c) 12,000 d) 1,800 e) 6,000 |
b) 600
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Suppose the economy has TFP = 10, there are 400 hours worked, and 60 unit of capital and
210 units of land the Cobb-Douglas production function is: Output = TFP x Hours^0.3 x Capital^0.3 x Land^0.2 23. In this economy, approximately how fast would the capital stock need to grow to produce growth of 1% per annum? a) 1% per annum b) 2.5% per annum c) 3.3% per annum d) 4.8% per annum e) 5.2% per annum |
c) 3.3% per annum
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Suppose the economy has TFP = 10, there are 400 hours worked, and 60 unit of capital and
210 units of land the Cobb-Douglas production function is: Output = TFP x Hours^0.3 x Capital^0.3 x Land^0.2 24. If total factor productivity grows by 1% per year while capital and labor each grow by 2% per year, then output grows by a) 2.2% per year b) 3% per year c) 5% per year d) 1.67% per year e) 4% per year |
a) 2.2% per year
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Suppose the economy has TFP = 10, there are 400 hours worked, and 60 unit of capital and
210 units of land the Cobb-Douglas production function is: Output = TFP x Hours^0.3 x Capital^0.3 x Land^0.2 25. For this hypothetical economy, the share of output paid to land is a) 70% b) 20% c) 50% d) 10% e) 90% |
b) 20%
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Suppose the economy has TFP = 10, there are 400 hours worked, and 60 unit of capital and
210 units of land the Cobb-Douglas production function is: Output = TFP x Hours^0.3 x Capital^0.3 x Land^0.2 26. Imagine that for this economy TFP=10 hours = 400, and land =210. If the rate of depreciation is 5% and investment is 20% of output, what is the steady state level of output? a) 500 b) 1000 c) 3000 d) 7000 e) 15000 |
c) 3000
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