Question 1

The government should formulate a technology policy because

Accepted Answer

Government intervention can help increase incentives for technology production, addressing situations where private incentives are insufficient to meet societal needs or to drive innovation at the desired pace.

Question 2

Which of the following has not been proposed by mainstream economists as a policy measure to encourage productivity growth?

Accepted Answer

Erecting quotas on foreign goods that are technologically advanced would not be proposed by mainstream economists as it goes against the principles of free trade and competition, which are believed to be important drivers of productivity growth. A and B are commonly suggested policies to encourage productivity growth.

Question 3

In terms of encouraging technological innovation,the government should intervene to encourage growth if the market is not providing the right incentives and there is little risk of government failure.

Accepted Answer

Government intervention can help stimulate technological innovation in cases where the market is not providing enough incentives, such as in areas of research and development where the costs are high and the potential benefits are uncertain. However, government intervention should only be considered if there is little risk of government failure, which occurs when government actions result in negative unintended consequences.

Question 4

According to Edward Lazear,chair of the President's Council of Economic Advisers,productivity growth is most important because

Accepted Answer

Edward Lazear stated that the most important reason for productivity growth is that it enables companies to pay higher wages to their employees. This indicates that choice A is the best answer.

Question 5

Some economists believe that productivity growth is important,but practically all are in agreement as to how this can be achieved.

Accepted Answer

While there are differing opinions on the best ways to achieve productivity growth, most economists agree on certain strategies such as investing in education and training, improving infrastructure, promoting innovation, and increasing competition.

Question 6

If economic policymakers want to increase people's income and reduce poverty,they must focus on reducing and maintaining productivity growth.

Accepted Answer

Economic policymakers aiming to increase people's income and reduce poverty should focus on increasing and maintaining productivity growth, as higher productivity leads to more efficient production, potentially higher wages, and economic growth.

Question 7

Which of the following types of government spending are likely to help economic growth? Why?
(A)FBI spending on advertising for new recruits
(B)Spending by NASA on research for a new solar panel
(C)Funding to improve the interstate highway system
(D)Spending by the federal government to send all 4-year-olds to preschool
(E)Spending by the federal government on research into alternative fuels to gasoline
(F)Subsidies to place more artwork in public places,such as the cows in Chicago

Accepted Answer

The answer of Which of the following types of government...

Question 8

Suppose a country's capital stock is $14 trillion,and a fall in government spending causes a $700 billion increase in investment.Use the growth-accounting formula to determine the effect the change in government purchases has on long-run output growth.(Assume that the coefficient on capital in the growth accounting formula is one-third.)

Accepted Answer

The answer of Suppose a country's capital stock is $14...

Question 9

What test should be performed to determine whether the government should engage in policies that affect economic growth?

Accepted Answer

The answer of What test should be performed to determine...

Question 10

Explain why the discussion about the former Soviet Union illustrates the importance of providing adequate incentives to enable technological change.

Accepted Answer

The answer of Explain why the discussion about the former...

Question 11

In recent years in the United States both technology and capital have contributed substantially to productivity growth,suggesting that policy should not focus solely on one determinant at the expense of the other.

Accepted Answer

The statement indicates that both technology and capital have contributed to productivity growth and therefore, policy should not focus solely on one determinant at the expense of the other.

Question 12

Disembodied technological change pertains to technological development not associated with new capital equipment.

Accepted Answer

Disembodied technological change refers to improvements in technology that do not require new capital equipment. Examples may include improvements in processes, software, or management techniques. It is contrasted with embodied technological change, which involves the development and adoption of new physical equipment or machinery.

Question 13

Suppose two separate growth-accounting studies between 1980 and 2010 differ on the relative importance of the contributions of capital formation and technological change to growth in productivity.That is,one study argues that technological change has been relatively more important than capital stock growth in contributing to productivity growth,while the second study argues the opposite.How would you reconcile these two studies? (Hint: What did the discussion in the text about the Thompson bagel machine illustrate?)

Accepted Answer

The answer of Suppose two separate growth-accounting studies between 1980...

Question 14

Renowned economists such as William Baumol,Paul Krugman,and Edward Lazear believe that productivity growth is one of the key issues for determining long-term economic growth.

Accepted Answer

Renowned economists like William Baumol, Paul Krugman, and Edward Lazear believe that productivity growth is a determining factor for long-term economic growth.

Question 15

Identify whether the following measures are labor or capital saving.
(A)A bookstore installs a system whereby customers can scan their book purchases and pay by credit card.An employee by the door verifies that customers have paid for their books.
(B)An accounting agency does some restructuring,which means that half of its work force can work out of their homes.
(C)A firm that used to operate two production facilities consolidates the two operations by running the production facility 24 hours a day instead of 12.

Accepted Answer

The answer of Identify whether the following measures are labor...

Question 16

The government should intervene to encourage growth if the market

Accepted Answer

If the market is not providing the right incentives, such as monopolistic behavior or inadequate investments in public goods, the government should intervene to encourage growth. However, if there is a risk of government failure, such as corruption or inefficient regulations, the government intervention could be counterproductive. Therefore, the best option is B, which implies that the government can intervene to correct market failures as long as the risk of government failure is minimal.

Question 17

According to Paul Krugman,distinguished economics columnist for the New York Times,which of the following is the most important issue facing the economy today?

Accepted Answer

Paul Krugman has written extensively about the issue of slow productivity growth being the most important challenge facing the economy today. Slow productivity growth can lead to stagnation and reduced economic growth, and Krugman argues that addressing this issue should be a top priority for policymakers.

Question 18

Suppose you are given the following information about productivity growth and growth of capital per hour of work for two different time periods.How much of the slowdown in productivity was due to technological change? Is there anything the government could do to reverse this situation?

Accepted Answer

The answer of Suppose you are given the following information...

Quiz 21: Productivity and Economic Growth