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Multiple Choice Quiz
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1
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
2
The Solow residual measures changes in
A)total factor productivity
B)labor productivity
C)the marginal product of capital
D)the cost of production
3
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
4
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%
5
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%
6
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
7
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
8
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
9
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
10
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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