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| 1 | |
GDP per head may be an imperfect measure of economic welfare because it excludes _________. |
| | A) | the value of leisure |
| | B) | externalities |
| | C) | household production |
| | D) | changes in the distribution of income |
| | E) | all of the above |
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| 2 | |
Along the steady-state path, output, capital and labour grow ___________. |
| | A) | at the same rate |
| | B) | at different rates |
| | C) | diverge |
| | D) | converge |
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| 3 | |
In a growing economy, capital-widening _______ the existing capital per worker to new extra workers. Capital-deepening ______ capital per worker for all workers. |
| | A) | restricts, reduces |
| | B) | restricts, raises |
| | C) | extends, raises |
| | D) | extends, reduces |
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| 4 | |
Labour-augmenting technical progress increases the effective labour supply. |
| | A) | True |
| | B) | False |
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| 5 | |
Endogenous growth implies the steady-state growth rate is affected by ______________ and _____________. |
| | A) | religious belief, dietary habits |
| | B) | economic behaviour, economic policy |
| | C) | sunspot cycles, pub opening hours |
| | D) | trades union militancy, directors’ pay |
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| 6 | |
If all inputs are doubled together and output exactly doubles, there are ________ returns to scale; if output more than doubles, there are __________ returns to scale. |
| | A) | increasing, decreasing |
| | B) | decreasing, increasing |
| | C) | constant, increasing |
| | D) | increasing, constant |
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| 7 | |
Y = A x f (K, L) is a simple _______. |
| | A) | consumption function |
| | B) | production function |
| | C) | savings function |
| | D) | export function |
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| 8 | |
The Malthusian trap is when poor countries consume all their income and cannot invest in capital. |
| | A) | True |
| | B) | False |
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| 9 | |
Capital, output, and labour all grow at _________along the steady-state growth path. |
| | A) | the same rate |
| | B) | different rates |
| | C) | convergent rates |
| | D) | divergent rates |
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| 10 | |
The zero-growth proposal argues that, because higher measured GNP imposes environmental costs, it is best to aim for zero growth of measured GNP. |
| | A) | True |
| | B) | False |
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| 11 | |
GNP is a poor measure of economic activity because it omits __________ and ___________. |
| | A) | private leisure, externalities |
| | B) | gold mining, oil extraction |
| | C) | social transfers, income redistribution |
| | D) | farm holidays, deck-chair hire |
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| 12 | |
Potential output can be increased by _____________ or by ______________. |
| | A) | increasing the use of labour, work sharingx |
| | B) | increasing the use of capital, reducing break times |
| | C) | increasing the use of land, having less holidays |
| | D) | increasing the use of all inputs, technical advances |
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| 13 | |
If a production input is in fixed supply, growth is impossible in the long run. |
| | A) | True |
| | B) | False |
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| 14 | |
The neoclassical theory of growth identifies the steady state rate of growth as the _________ just sufficient to keep ____________ constant while labour grows. |
| | A) | saving, investment |
| | B) | technology, productivity |
| | C) | consumer demand, output |
| | D) | investment, capital per person |
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| 15 | |
In the neoclassical theory of growth, a higher saving rate leads to __________. |
| | A) | a higher long-run growth rate |
| | B) | a fluctuating long-run growth rate |
| | C) | a long-run lower growth rate |
| | D) | no change in the long-run growth rate |
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| 16 | |
The convergence hypothesis states that poor countries grow more slowly than average, but rich countries grow more quickly than average. |
| | A) | True |
| | B) | False |
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| 17 | |
The crucial factors determining long-run economic growth in the Solow model are ___________ and ________. |
| | A) | Population size, x-efficiency |
| | B) | Population age distribution, education |
| | C) | Population growth, technical progress |
| | D) | Population growth, education |
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| 18 | |
The possibility that one firm’s investment can benefit other firms is evidence in support of ____________. |
| | A) | exogenous growth |
| | B) | endogenous growth |
| | C) | steady state growth |
| | D) | the Solow residual |
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| 19 | |
Theories of endogenous growth are built on increasing returns to accumulation. |
| | A) | True |
| | B) | False |
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| 20 | |
Society should undertake all activities (even though they may produce negative externalities) up to the point at which ______________. |
| | A) | their net marginal benefit equals net marginal cost to society |
| | B) | economic growth remains positive |
| | C) | steady state is achieved |
| | D) | residual growth is zero |
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