Question 1

Assume a Cobb-Douglas production function where the share of capital and labor is each 1/2.If the growth in total factor productivity is zero and labor and capital each grow by 2%, then

Accepted Answer

With a Cobb-Douglas production function where the share of capital and labor is each 1/2, output (Y) is given by Y = AK^(1/2)N^(1/2), where A is the total factor productivity. If the growth in total factor productivity is zero and labor and capital each grow by 2%, then output growth can be calculated as follows:

Y(new)/Y(old) =  (A(new)K(new)^(1/2)N(new)^(1/2))/(A(old)K(old)^(1/2)N(old)^(1/2))
= (1*1.02^(1/2)*1.02^(1/2))/(1*1*1)   [Assuming initial values are 1 for A, K and N for simplicity]
= 2%

The marginal product of capital in a Cobb-Douglas production function with capital share of 1/2 is given by MPK = (1/2)Y/K. Thus, the marginal product of capital in this case would be Y/(2K). Therefore, option B is the correct answer.

Question 2

From 1973 to 1992, by how much more did GDP grow in Japan than in the United States?

Accepted Answer

From 1973 to 1992, Japan's GDP growth outpaced that of the United States by 36%.

Question 3

Which of the following economists contributed greatly to neoclassical growth theory in the 1950s and 1960s?

Accepted Answer

Robert Solow is considered the leading figure in neoclassical growth theory, and his seminal paper in 1956 established the Solow-Swan model. While the other economists mentioned have also made contributions to the field, their work built upon Solow's initial framework.

Question 4

The Cobb-Douglas aggregate production function provides a fairly good approximation of the U.S.economy if we assume that

Accepted Answer

The answer of The Cobb-Douglas aggregate production function provides a...

Question 5

If we assume a Cobb-Douglas production function where the share of capital is equal to 0.2 and the share of labor is equal to 0.8, then the marginal product of capital is equal to

Accepted Answer

In the Cobb-Douglas production function, the marginal product of capital is equal to the partial derivative of the production function with respect to capital, holding labor constant.

So, MPK = 0.2Y/K

Simplifying, MPK = Y/5K

Therefore, the correct answer is D.

Question 6

Given the production function Y = AF(K,N) and assuming constant returns to scale, the contribution of capital to output growth can be estimated by

Accepted Answer

The contribution of capital to output growth can be estimated by multiplying the growth rate of capital by capital's share in production. This is because for the production function Y = AF(K,N), the output is a function of capital and labor inputs, with A as total factor productivity. Assuming constant returns to scale, if the capital stock increases by a certain percentage, output should increase by the same percentage. Therefore, the contribution of capital to output growth is proportional to capital's share in production.

Question 7

Assume a Cobb-Douglas production function where the share of capital is 0.3 and the share of labor is 0.7.If capital grows by 1.5%, labor grows by 2%, and growth of total factor productivity is 1.2%, by how much does total output grow?

Accepted Answer

The growth rate of output in a Cobb-Douglas production function is the weighted sum of the growth rates of capital, labor, and total factor productivity. Thus, 0.3*1.5% + 0.7*2% + 1.2% = 3.05%.

Question 8

If we assume a Cobb-Douglas production function, where the share of capital is 0.25 and the share of labor is 0.75, then the marginal product of labor is equal to

Accepted Answer

In a Cobb-Douglas production function, the marginal product of labor (MPL) is equal to the share of labor (0.75) times the total production (Y) divided by the total amount of labor (N). Mathematically, MPL = 0.75Y/N. Simplifying this expression gives MPL = 3Y/4N. Therefore, the correct choice is B.

Question 9

For the U.S.economy, we can assume that

Accepted Answer

The answer of For the U.S.economy, we can assume that
...

Question 10

Assume a Cobb-Douglas production function where the share of labor is 0.7 and the share of capital is 0.3.If there is no technological progress, capital grows at 1.5%, and labor doesn't grow at all, what is the growth rate of output?

Accepted Answer

The answer of Assume a Cobb-Douglas production function where the...

Question 11

Changes in total factor productivity are also called

Accepted Answer

Changes in total factor productivity are commonly referred to as the Solow residual. This residual measures the unexplained factors that contribute to economic growth, which are not attributed to labor or capital inputs.

Question 12

Growth accounting explains

Accepted Answer

Growth accounting measures what factors contribute to economic growth, such as labor, capital, and technological advances. Therefore, it calculates the contribution of each factor in the growth of total output, rather than controlling the accumulation of capital or the effect of savings rate on capital.

Question 13

Which of the following countries had the lowest ratio of investment to GDP in 1992?

Accepted Answer

In 1992, the United States had the lowest ratio of investment to GDP among the listed countries. This is attributed to various economic factors, including its large consumer market that often leads to a higher consumption rate compared to its investment rate.

Question 14

In the neoclassical growth model, an increase in the savings rate

Accepted Answer

An increase in the savings rate in the neoclassical growth model raises the steady-state level of output by allowing more investment in capital, which increases the capital stock and output in the long run. However, it does not affect the long-term economic growth rate, which is determined by exogenous factors like technology growth.

Question 15

Which of the following is NOT a source of increased factor productivity?

Accepted Answer

Increasing the size of the capital stock would increase the quantity of inputs available, but not necessarily improve the efficiency or productivity of those inputs. Therefore, it is not necessarily a source of increased factor productivity.

Question 16

Which of the following is NOT a source of long-term output growth?

Accepted Answer

Growth in consumption expenditures does not directly contribute to long-term output growth. It may increase demand in the short run, but sustained long-term growth requires increases in labor, capital, technology, and knowledge.

Question 17

According to Solow's estimate, out of the average annual economic growth rate of 2.9% for the U.S.from 1909 to 1949, how much was attributable to the accumulation of capital?

Accepted Answer

Solow's estimate suggests that about one-third of the average annual economic growth rate of 2.9% for the U.S. from 1909 to 1949 was attributable to the accumulation of capital. Therefore, the correct choice is B) 0.32%.

Question 18

Which of the following is NOT a source of increased factor productivity?

Accepted Answer

Growth in the size of the labor force may increase output, but it does not necessarily increase factor productivity. Factor productivity measures the efficiency and output of each unit of input (e.g. labor, capital, resources). The other options (advances in knowledge, more efficient resource allocation, improved methods of production, and technological progress) are all sources of increased factor productivity, as they improve the efficiency and output of input units.

Question 19

Assume a Cobb-Douglas production function where the share of labor is 0.7 and the share of capital is 0.3.If there is no technological progress, labor grows at 2%, and capital grows at 1.5%, then real output will grow by

Accepted Answer

According to the Cobb-Douglas production function, the growth rate of real output can be calculated as follows:

Growth rate of real output = (0.7 x 2%) + (0.3 x 1.5%) = 1.4% + 0.45% = 1.85%

Therefore, the best choice is C) 1.85%.

Question 20

The relationship between the output produced in an economy, the input of factors of production, and the state of technological knowledge is called the

Accepted Answer

The relationship between the output produced in an economy, the input of factors of production, and the state of technological knowledge is captured by the aggregate production function. The aggregate supply function refers to the total amount of goods and services that firms in an economy are willing and able to sell at a given price level, while the aggregate investment function refers to the relationship between the level of investment and other macroeconomic variables. The marginal product of labor and capital refer to the additional output produced by one additional unit of these factors of production, respectively.

Quiz 3: Growth and accumulation

Assume a Cobb-Douglas production function where the share of capital and labor is each 1/2.If the growth in total factor productivity is zero and labor and capital each grow by 2%, then

From 1973 to 1992, by how much more did GDP grow in Japan than in the United States?

Which of the following economists contributed greatly to neoclassical growth theory in the 1950s and 1960s?

The Cobb-Douglas aggregate production function provides a fairly good approximation of the U.S.economy if we assume that

If we assume a Cobb-Douglas production function where the share of capital is equal to 0.2 and the share of labor is equal to 0.8, then the marginal product of capital is equal to

Given the production function Y = AF(K,N) and assuming constant returns to scale, the contribution of capital to output growth can be estimated by

Assume a Cobb-Douglas production function where the share of capital is 0.3 and the share of labor is 0.7.If capital grows by 1.5%, labor grows by 2%, and growth of total factor productivity is 1.2%, by how much does total output grow?

If we assume a Cobb-Douglas production function, where the share of capital is 0.25 and the share of labor is 0.75, then the marginal product of labor is equal to

For the U.S.economy, we can assume that

Assume a Cobb-Douglas production function where the share of labor is 0.7 and the share of capital is 0.3.If there is no technological progress, capital grows at 1.5%, and labor doesn't grow at all, what is the growth rate of output?

Changes in total factor productivity are also called

Growth accounting explains

Which of the following countries had the lowest ratio of investment to GDP in 1992?

In the neoclassical growth model, an increase in the savings rate

Which of the following is NOT a source of increased factor productivity?

Which of the following is NOT a source of long-term output growth?

According to Solow's estimate, out of the average annual economic growth rate of 2.9% for the U.S.from 1909 to 1949, how much was attributable to the accumulation of capital?

Which of the following is NOT a source of increased factor productivity?

Assume a Cobb-Douglas production function where the share of labor is 0.7 and the share of capital is 0.3.If there is no technological progress, labor grows at 2%, and capital grows at 1.5%, then real output will grow by

The relationship between the output produced in an economy, the input of factors of production, and the state of technological knowledge is called the