Deck 12: Technological Progress and Growth

Question 1

Which of the following will decrease the steady- state growth rate of output per worker?

A) A decrease in technological progress.
B) A decrease in the rate of depreciation.
C) A decrease in the saving rate.
D) A decrease in the investment rate.
E) A decrease in the population growth rate.

Answer 1

A decrease in technological progress.

Question 2

Which of the following is not constant when balanced growth is obtained?

A) Y/AN.
B) K/AN.
C) Y.
D) AN.
E) All of the above.

Answer 2

All of the above.

Question 3

Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that output (Y) is

A) growing at a rate of gA - gN.
B) growing at a rate of gA/gN.
C) growing at a rate of gA.
D) growing at a rate of gA + gN.
E) growing at a rate of gN.

Answer 3

growing at a rate of gA + gN.

Question 4

Which of the following represents the appropriability of research?

A) How R&D spending translates into new ideas.
B) The extent to which firms benefit from the results of their own R&D spending.
C) The rate of technological progress.
D) The protection given to new products by the law.
E) Both A and D.

Question 5

Refer to the information above. Which of the following represents the steady- state growth rate of output per worker in this economy?

A) 12%.
B) 2%.
C) 3%.
D) 5%.
E) 18%.

Question 6

Which of the following can help explain the technology gap that exists between some countries?

A) The relative absence of entrepreneurs.
B) Poorly established property rights.
C) Political instability.
D) All of the above.
E) None of the above.

Question 7

Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that the output per effective worker (Y/AN) is

A) growing at a rate of gA - gN.
B) growing at a rate of gN.
C) growing at a rate of 0.
D) growing at a rate of gA + gN.
E) growing at a rate of gA.

Question 8

Use the following information to answer the question(s) below:
6 = 0.13
gA = 0.05
gN = 0.04
Given the information above, the steady state rate of growth of Y/AN is:

A) 5%.
B) 9%.
C) 22%.
D) 4%.
E) 0%.

Question 9

Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that:

A) I/AN = (6) K/AN.
B) I = gNK.
C) I = 6K.
D) I/AN = (gA + gN) K/AN.
E) I/AN = (6 + gA + gN) K/AN.

Question 10

Assume the production function is represented by Y = F (K, AN). Now suppose the variable, A, increases by 20%. This implies that:

A) the same output can be produced with 20% more labour.
B) the same output can be produced with 20% less labour.
C) the same quantity of labour can produce half the output.
D) the same output can be produced with half the capital.
E) the same quantity of labour can produce twice the output.

Question 11

Use the information below to answer the following question(s):
1() the rate of depreciation is 14% per year,
2() the population growth rate is 4% per year, and
3() the growth rate of technology is 5% per year.
Refer to the information above. Which of the following equals the annual growth rate of "effective labour" in the steady state in this economy?

A) 3%.
B) 2%.
C) 5%.
D) 12%.
E) 9%.

Question 12

"Convergence" in recent years can be mostly attributed to in the poorer countries.

A) a crackdown on "pirate" technologies
B) higher net migration
C) greater technological progress
D) longer working hours
E) faster capital accumulation

Question 13

Refer to the information above. Which of the following represents the level of investment needed to maintain a constant capital stock (K) in this economy?

A) 0.08K /AN.
B) 0.05K/ AN.
C) 0.31K /AN.
D) 0.23K /AN.
E) 0.12K /AN.

Question 14

Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that the capital stock is

A) constant.
B) growing at a rate of gA + gN.
C) growing at a rate of gN.
D) growing at a rate of gA.
E) growing at a rate of gA - gN.

Question 15

Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that the capital per effective worker (K/AN) is

A) growing at a rate of 6 + gA + gN.
B) growing at a rate of zero.
C) growing at a rate of gA + gN.
D) growing at a rate of gA.
E) growing at a rate of gN.

Question 16

Assume that an economy experiences both positive population growth and technological progress. In this economy, which of the following is constant when balanced growth is achieved?

A) S.
B) K/AN.
C) I.
D) Y/N.
E) N.

Question 17

Use the following information to answer the question(s) below:
6 = 0.13
gA = 0.05
gN = 0.04
Given the information above, the steady state rate of growth of output is:

A) 4%.
B) 9%.
C) 5%.
D) 22%.
E) 0%.

Question 18

Let a represent labour's share of total output. Economic growth attributable to labour growth is represented by:

A) agA.
B) 1/a.
C) agk.
D) agN.
E) agy.

Question 19

Assume the production function is represented by Y = F (K, AN). Given this production function and the constant returns to scale assumption, output will increase by 7% when which of the following occurs?

A) K and AN increase by 7%.
B) N or A increase by 7%.
C) K and A increase by 7%.
D) N and A increase by 7%.
E) K or AN increase by 7%.

Question 20

Which of the following represents the fertility of research?

A) The extent to which firms benefit from the results of their own R&D spending.
B) The protection given to new products by the law.
C) The rate of technological progress.
D) How R&D spending translates into new ideas.
E) Both A and C.

Question 21

Patents represent:

A) how R&D spending translates into new ideas.
B) the rate of technological progress.
C) the extent to which firms benefit from the results of their own R&D spending.
D) the government standard that the innovator has to pass.
E) the protection given to new products by the law.

Question 22

Which of the following will increase the steady- state growth rate of capital?

A) An increase in the population growth rate.
B) A temporary increase in technological progress.
C) An increase in the depreciation rate.
D) An increase in the saving rate.
E) A temporary increase in the population growth rate.

Question 23

Which of the following represents a dimension of technological progress?

A) A larger variety of products.
B) Larger quantities of output for given quantities of capital and labour.
C) New products.
D) Better products.
E) All of the above.

Question 24

Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that the output per worker (Y/N) is

A) growing at a rate of gA - gN.
B) growing at a rate of 6 + gA + gN.
C) growing at a rate of gN.
D) growing at a rate of gA.
E) constant.

Question 25

Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that the capital per worker (K/N) is

A) growing at the same rate as Y/N.
B) growing at a rate of gN.
C) constant.
D) growing at a rate of gA + gN.
E) growing at a rate of gA - gN.

Question 26

Which of the following will cause an increase in output per effective worker?

A) A doubling of capital and technology.
B) An increase in population.
C) A doubling of both capital and labour.
D) An increase in technology.
E) An increase in capital per effective worker.

Question 27

Research suggest that the relatively higher rate of growth of output per capita in rich countries between 1985 and 2009 was the result of which of the following?

A) An increase in the saving rate.
B) An increase in the rate of population growth.
C) A decrease in the saving rate.
D) An increase in the rate of technological progress.
E) An increase in capital per effective labour.

Question 28

Assume that an economy experiences both positive population growth and technological progress. A decrease in the saving rate will cause:

A) a permanent decrease in the rate of growth of output.
B) no change in output per effective labour.
C) a permanent decrease in the rate of growth of output per worker.
D) no change in capital per effective labour.
E) no change in the rate of growth of output.

Question 29

The evidence shows that, over the last 25 years, spending on research and development in the rich countries has:

A) increased as a percentage of GDP.
B) decreased dramatically.
C) decreased slightly.
D) remained constant.
E) increased in absolute numbers, but decreased as a percentage of GDP.

Question 30

The nature of technological progress in developing countries is more likely to be:

A) new ideas and products.
B) innovation.
C) imitation.
D) All of the above.
E) None of the above.

Question 31

The rate of growth of output per worker in Australia between 1985 and 2009 was approximately equal to which of the following?

A) 2.5%.
B) 0.5%.
C) 5.5%.
D) 1.5%.
E) 6.5%.

Question 32

Patent protection is important in affecting technological progress because it makes research and development:

A) more easily available.
B) diffuse more quickly.
C) more fertile.
D) environmentally responsible.
E) more appropriable.

Question 33

Convergence in output growth between less advanced and advanced countries is attributable to:

A) technological catch- up.
B) technological destruction.
C) technological creation.
D) the technological frontier.
E) the technological gap.

Question 34

Use the following information to answer the question(s) below:
6 = 0.13
gA = 0.05
gN = 0.04
Given the information above, we know that effective labour (AN) grows at what rate?

A) 4%.
B) 2%.
C) 17%.
D) 9%.
E) 11%.

Question 35

Let a represent labour's share of total output. The Solow residual is represented by:

A) gy - [AgN + (1 - A) gk].
B) gy.
C) 1/(1- A).
D) AgN.
E) gk.

Question 36

The nature of technological progress in more advanced countries is likely to be:

A) developing new products.
B) developing new ideas.
C) developing new processes.
D) All of the above.
E) Both A and B.

Question 37

Which of the following best describes a situation where research is considered relatively fertile?

A) Research that costs the firms relatively little money.
B) Research that translates into many new products.
C) Research that has direct applications in the field of agriculture.
D) Research that cannot be easily copied by other firms.
E) Research that can be easily understood, even by those with little technical background.

Question 38

Use the following information to answer the question(s) below:
6 = 0.13
gA = 0.05
gN = 0.04
Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that growth rate of K/AN is:

A) gA / gN.
B) 0.
C) gA + gN.
D) gA.
E) gA - gN.

Question 39

Which of the following plays the crucial role in explaining China's sustained high output growth since 1995?

A) Massive labour supply.
B) Capital accumulation.
C) Technological progress.
D) All of the above.
E) None of the above.

Question 40

Which of the following best describes a situation where research is considered appropriable?

A) Research that translates into many new products.
B) Research that is easily copied by another firm.
C) Research that is well suited to its commercial purpose.
D) All of the above.
E) None of the above.

Question 41

Given the information above, which of the following represents the amount of investment per effective worker needed to maintain a constant level of capital per effective worker (K/AN)?

A) 0.22(K/AN).
B) 0.13(K/AN).
C) 0.05(K/AN).
D) 0.18(K/AN).
E) 0.08(K/AN).

Question 42

Graphically illustrate and explain the effects of an increase in population growth on the Solow- Swan growth model. In your answer, you must clearly label all curves and the initial and final equilibria. In your answer, explain what happens to the rate of growth of output per worker and the rate of growth of output as the economy adjusts to this event.

Question 43

High growth in the rich countries from 1985 to 2010 was most likely due to:

A) high technological progress.
B) high capital accumulation.
C) the destruction of capital during World War II.
D) high population growth.
E) a high saving rate.

Question 44

Discuss the relative strengths of capital accumulation and technological progress in contributing to output growth rates in Australia during 1985- 2009. What are the long- run implications?

Question 45

Discuss the different nature of technological progress between more advanced economies and less advanced economies. How is technological progress in less advanced economies connected to convergence to more advanced economies?

Question 46

The method of constructing a measure of technological progress relies on which of the following assumptions?

A) The investment rate does not change.
B) Population growth is zero.
C) Each factor of production is paid its marginal product.
D) Population growth does not change.
E) The saving rate does not change.

Question 47

Assume that a fiscal policy action results in a decrease in the saving rate. This decrease in the saving rate will cause a decrease in which of the following once the economy reaches its new steady state equilibrium?

A) The growth rate of output.
B) The growth rate of capital per worker.
C) The growth rate of capital.
D) All of the above.
E) None of the above.

Question 48

Suppose output per worker in a country has grown at the same rate as technology for over many years. This country's growth would be described as:

A) "effective" growth.
B) "optimal" growth.
C) "balanced" growth.
D) "diffuse" growth.
E) "appropriable" growth.

Question 49

Assume that an economy experiences both positive population growth and technological progress. In this economy, which of the following is constant when balanced growth is achieved?

A) AN.
B) Y.
C) K/N.
D) Y/AN.
E) K.

Question 50

Use the following information to answer the question(s) below:
6 = 0.13
gA = 0.05
gN = 0.04
Given the information above, the steady state rate of growth of output per worker is:

A) 22%.
B) 0%.
C) 5%.
D) 4%.
E) 9%.

Question 51

Among the reasons that the poor countries have been unable to close the "technology gap" with the rich countries is:

A) poorly established property rights.
B) low education levels.
C) poorly developed financial markets.
D) All of the above.
E) None of the above.

Question 52

Which of the following is always true after an economy reaches a balanced growth equilibrium?

A) The growth rate of output equals the rate of depreciation.
B) The growth rate of capital is equal to the savings rate.
C) The growth rate of capital is equal to the growth rate of the effective workforce.
D) Population growth is zero.
E) The growth rate of output equals the rate of saving.

Question 53

Assume the production function is represented by Y = F (K, AN) and the number of workers is constant. Now suppose the state of technology variable, A, increases by 6%. This implies that which of the following variables will also increase by 6%?

A) Effective labour.
B) Capital.
C) Output.
D) All of the above.
E) None of the above.

Question 54

Graphically illustrate and explain the effects of a decrease in the saving rate on the Solow- Swan growth model. In your answer, you must clearly label all curves and the initial and final equilibria. In your answer, explain what happens to the rate of growth of output per worker and the rate of growth of output as the economy adjusts to this event.

Question 55

Use the information below to answer the following question(s):
1() the rate of depreciation is 14% per year,
2() the population growth rate is 4% per year, and
3() the growth rate of technology is 5% per year.
Refer to the information above. Which of the following represents the steady- state growth rate of output in this economy?

A) 6%.
B) 9%.
C) 12%.
D) 4%.
E) 18%.

Question 56

Suppose there is an increase in the saving rate. Explain what effect this increase in the saving rate will have on the rate of growth of output per worker.

Question 57

Refer to the information above. Which of the following represents the level of investment needed to maintain constant capital per effective worker (K/AN) in this economy?

A) 0.05K.
B) 0.08K.
C) 0.12K.
D) 0.31K.
E) 0.23K.

Question 58

Convergence of output per capita across countries has come from:

A) a convergence of the accumulation of capital.
B) a convergence of depreciation rates.
C) higher technological progress from the countries that started behind.
D) a convergence of saving rates.
E) a convergence of population growth.

Question 59

The source of growth for Australia from 1985- 2009 has mainly come from:

A) high population growth.
B) a decrease in the depreciation rate.
C) a decrease in the rate of technological progress.
D) an increase in technological progress.
E) high capital accumulation.

Question 60

Explain what is meant by the fertility and appropriability of the research process.

Question 61

Discuss (i) the relative strengths of capital accumulation and technological progress in contributing to China's high growth rates during 1995- 2007; and (ii) the two main channels of technological progress in China.

Question 62

Explain what factors determine how much investment is required to maintain a given level of capital per effective worker.

Question 63

Explain the different dimensions of technological progress.

Question 64

Assume the economy has achieved the balanced growth steady state. Explain what factors determine the rates of growth of each of the following variables when balanced growth is achieved: output per effective worker, capital per effective worker, output per worker, output, and consumption per worker.

Question 65

Explain what factors determine the slope of the required investment line.

Question 66

Graphically illustrate and explain the effects of an increase in the rate of technological progress on the Solow- Swan growth model. In your answer, you must clearly label all curves and the initial and final equilibria. In your answer, explain what happens to the rate of growth of output per worker and the rate of growth of output as the economy adjusts to this event.