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| 1 | |
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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| 2 | |
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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| 3 | |
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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| 4 | |
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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| 5 | |
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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| 6 | |
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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| 7 | |
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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| 8 | |
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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| 9 | |
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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| 10 | |
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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