Question 1

What is the main shortcoming of the neoclassical growth model and how does the new growth theory address this shortcoming?

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Question 2

What are the basic arguments of the classical growth theory?

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Question 3

Suppose the President asks you to write him a letter suggesting ways the government might help the economy achieve permanently higher rates of economic growth. Based on your understanding of growth theory and growth accounting, what would you suggest?

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Question 4

-The first table above gives the labor demand and labor supply schedules for a nation. The second table gives its production function.
a) What is the equilibrium real wage rate and the level of employment?
b) What is potential GDP?

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-The first table above gives the labor...

Question 5

Characterize the years between 1961 and 2008 on the basis of labor productivity growth.

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Question 6

Explain the role played by technological change in classical growth theory, neoclassical growth theory, and new growth theory.

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Question 7

"According to the neoclassical growth theory, national incentives to save, invest, accumulate human capital, and develop new technology influence the country's growth rate of real GDP." Comment on the accuracy of the previous statement.

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Question 8

What is the law of diminishing returns? Give an example of what the law of diminishing returns implies.

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Question 9

What is the main difference between classical economists' ideas about economic growth versus what modern evidence suggests?

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Question 10

In the classical theory of growth, what is the final outcome of an increase in growth and labor productivity?

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Question 11

What are the sources of human capital?

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Question 12

List and explain the factors that can increase labor productivity.

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Question 13

What are the basic arguments of the neoclassical growth theory?

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Question 14

What is the one- third rule? What is it used for?

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Question 15

How does the new growth theory explain economic growth?

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Question 16

Of the three economic growth theories, which is the most optimistic about the chances of real GDP per person growing indefinitely? Which is the most pessimistic? What accounts for the differences?

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Question 17