Question 1

In the two-sector endogenous growth model, the fraction of labor in universities (u) affects the steady-state:

Accepted Answer

The answer of In the two-sector endogenous growth model, the...

Question 2

Empirical studies indicate that the rate of social return from positive "standing on others' shoulders" externalities of research ______ the negative "stepping on toes" externalities of research.

Accepted Answer

Empirical studies have shown that the positive externalities of research, such as improved knowledge and technologies, lead to higher social returns than the negative externalities, such as competition and redundancy in research. This suggests that the benefits of standing on others' shoulders far outweigh the costs of stepping on toes. Therefore, option A) "greatly exceed" is the best choice.

Question 3

Increases in the rate of growth of income per person in the United States in the mid-1990s is mostly likely the result of:

Accepted Answer

The mid-1990s saw a significant advancement in information technology, with the growth of the internet and widespread adoption of personal computers. This, in turn, led to increased productivity and efficiency in many industries, contributing to overall economic growth.

Question 4

If productivity growth in the United States had remained at its level before the recent productivity slowdown, real income today would be more than ______ percent higher.

Accepted Answer

If productivity growth in the United States had remained at its level before the recent productivity slowdown, real income today would be more than 20 percent higher.

Question 5

Total factor productivity may be measured by:

Accepted Answer

Total factor productivity is a measure of how efficiently inputs (capital and labor) are being used to produce output. Option B subtracts the growth of inputs multiplied by their respective share of output from the growth of output, which gives a measure of how much productivity growth is occurring. Option A only subtracts the growth of inputs from the growth of output, which doesn't account for differences in how much capital and labor contribute to output. Option C only adds the growth of inputs together, without accounting for their relative contributions. Option D adds the growth of inputs multiplied by their respective share of output, which gives a measure of output growth that is not adjusted for productivity growth.

Question 6

If Y is output, K is capital, u is the fraction of the labor force in universities, L is labor, and E is the stock of knowledge, and the production Y = F(K,(1 - u) EL) exhibits constant returns to scale, then output (Y) will double if:

Accepted Answer

Doubling both capital (K) and the stock of knowledge (E) while keeping the fraction of the labor force in universities (u) and labor (L) constant will double the output (Y) due to the constant returns to scale property of the production function. This means that increasing all inputs by the same proportion results in an increase in output by that proportion.

Question 7

When capital increases by $\Delta$K units, output increases by:

Accepted Answer

When capital increases, output increases by the marginal product of capital (MPK) times the increase in capital, which is represented by "MPK × ΔK" in option D.

Question 8

Endogenous growth theory rejects the assumption of exogenous:

Accepted Answer

Endogenous growth theory asserts that technological progress is an internal result of the economy, not an external influence. It implies that technological progress is a result of R&D, knowledge spillovers, and human capital accumulation, instead of being determined outside of the economic system. Therefore, it rejects the assumption of exogenous technological change.

Question 9

Schumpeter's thesis of "creative destruction" is an explanation of economic progress resulting from:

Accepted Answer

Schumpeter's theory of "creative destruction" suggests that economic progress occurs when new products or methods disrupt and ultimately displace older ways of doing things. This can often result in incumbent producers going out of business as newer, more innovative producers take over.

Question 10

The productivity slowdown that began in the 1970s has been attributed, at least partly, to each of the following except:

Accepted Answer

The productivity slowdown has been attributed to a variety of factors including A) running out of new ideas, B) a deterioration in education quality, and D) a lower average level of experience among workers. However, there has not been a decline in the number of workers in the labor force. In fact, the size of the labor force has grown since the 1970s.

Question 11

If capital grows at 3 percent per year and labor grows at 1 percent per year, and capital's share is 1/3 while labor's share is 2/3, if there is no technological progress and the neoclassical assumptions hold, the growth rate of output will be:

Accepted Answer

The answer of If capital grows at 3 percent per...

Question 12

In the two-sector endogenous growth model, the saving rate (s) affects the steady-state:

Accepted Answer

In the two-sector endogenous growth model, the saving rate (s) primarily affects the steady-state level of income, not the growth rate of income or the growth rate of the stock of knowledge.

Question 13

In the two-sector endogenous growth model, income growth persists because:

Accepted Answer

In the two-sector endogenous growth model, persistent income growth is driven by continuous knowledge creation, which is typically modeled as occurring in universities or research sectors.

Question 14

In the two-sector endogenous growth model, the steady-state stock of physical capital is determined by _____, and the growth in the stock of knowledge is determined by _____.

Accepted Answer

In the two-sector endogenous growth model, the steady-state stock of physical capital is determined by the saving rate, as savings influence investment in physical capital. The growth in the stock of knowledge is determined by the fraction of labor in universities, as this reflects the investment in human capital and research, driving knowledge growth.

Question 15

In the Solow growth model, capital exhibits ______ returns. In the basic endogenous growth model, capital exhibits ______ returns.

Accepted Answer

In the Solow growth model, capital exhibits diminishing returns, meaning that as more capital is added, the additional output produced from an extra unit of capital decreases. In contrast, the basic endogenous growth model assumes constant returns to capital, implying that additional units of capital increase output at a constant rate, which supports sustained long-term economic growth without diminishing returns.

Question 16

The endogenous growth model's assumption of constant returns to capital is more plausible if capital is defined to include:

Accepted Answer

Including knowledge as a part of capital in the endogenous growth model can help explain the sustained growth in productivity and living standards that we observe in reality. This is because knowledge is a non-rival and non-excludable form of capital that can be accumulated without diminishing its value, and can be shared and built upon by others. Therefore, assuming constant returns to capital in the presence of knowledge accumulation is more plausible than assuming constant returns to only physical capital like plant and equipment, which can suffer from diminishing marginal returns and depreciation.

Question 17

In the Solow growth model, technological change is ______, whereas in endogenous growth theories, technological change is ______.

Accepted Answer

In the Solow growth model, technological change is assumed and not explained, whereas in endogenous growth theories, technological change is explained and not just assumed.

Question 18

When capital increases by $\Delta$K units and labor increases by $\Delta$L units, output ($\Delta$Y) increases by:

Accepted Answer

Output increases based on the contributions of capital and labor, which are measured by their respective marginal products (MPK for capital and MPL for labor) multiplied by the increases in each factor (F1F1F1S1F1F1F10K for capital and F1F1F1S1F1F1F10L for labor). Therefore, the correct formula for the increase in output is (MPK × F1F1F1S1F1F1F10K) + (MPL × F1F1F1S1F1F1F10L). Choice A and B do not take into account the contributions of both factors, and choice D multiplies MPL by F1F1F1S1F1F1F10K instead of F1F1F1S1F1F1F10L.

Question 19

In the basic endogenous growth model, income can grow forever-even without exogenous technological progress-because:

Accepted Answer

In the basic endogenous growth model, the key feature that allows income to grow indefinitely without the need for exogenous technological progress is the assumption that capital does not exhibit diminishing returns. This means that as more capital is accumulated, its marginal productivity does not decrease, allowing sustained economic growth.

Question 20

Empirical results justify substantial government subsidies to research based on the finding that the:

Accepted Answer

Empirical results suggest that the social return to research often exceeds the private return. This means that the benefits to society as a whole from research are greater than the benefits captured by the entity conducting the research. This discrepancy justifies government subsidies to encourage more research investment, as the full value of the research is not fully internalized by the private sector.

Quiz 9: Economic Growth II: Technology, Empirics, and Policy

In the two-sector endogenous growth model, the fraction of labor in universities (u) affects the steady-state:

Empirical studies indicate that the rate of social return from positive "standing on others' shoulders" externalities of research ______ the negative "stepping on toes" externalities of research.

Increases in the rate of growth of income per person in the United States in the mid-1990s is mostly likely the result of:

If productivity growth in the United States had remained at its level before the recent productivity slowdown, real income today would be more than ______ percent higher.

Total factor productivity may be measured by:

If Y is output, K is capital, u is the fraction of the labor force in universities, L is labor, and E is the stock of knowledge, and the production Y = F(K,(1 - u) EL) exhibits constant returns to scale, then output (Y) will double if:

When capital increases by $\Delta$ K units, output increases by:

Endogenous growth theory rejects the assumption of exogenous:

Schumpeter's thesis of "creative destruction" is an explanation of economic progress resulting from:

The productivity slowdown that began in the 1970s has been attributed, at least partly, to each of the following except:

If capital grows at 3 percent per year and labor grows at 1 percent per year, and capital's share is 1/3 while labor's share is 2/3, if there is no technological progress and the neoclassical assumptions hold, the growth rate of output will be:

In the two-sector endogenous growth model, the saving rate (s) affects the steady-state:

In the two-sector endogenous growth model, income growth persists because:

In the two-sector endogenous growth model, the steady-state stock of physical capital is determined by _, and the growth in the stock of knowledge is determined by _.

In the Solow growth model, capital exhibits returns. In the basic endogenous growth model, capital exhibits returns.

The endogenous growth model's assumption of constant returns to capital is more plausible if capital is defined to include:

In the Solow growth model, technological change is , whereas in endogenous growth theories, technological change is .

When capital increases by $\Delta$ K units and labor increases by $\Delta$ L units, output ( $\Delta$ Y) increases by:

In the basic endogenous growth model, income can grow forever-even without exogenous technological progress-because:

Empirical results justify substantial government subsidies to research based on the finding that the:

Quiz 9: Economic Growth II: Technology, Empirics, and Policy

In the two-sector endogenous growth model, the fraction of labor in universities (u) affects the steady-state:

Empirical studies indicate that the rate of social return from positive "standing on others' shoulders" externalities of research ______ the negative "stepping on toes" externalities of research.

Increases in the rate of growth of income per person in the United States in the mid-1990s is mostly likely the result of:

If productivity growth in the United States had remained at its level before the recent productivity slowdown, real income today would be more than ______ percent higher.

Total factor productivity may be measured by:

If Y is output, K is capital, u is the fraction of the labor force in universities, L is labor, and E is the stock of knowledge, and the production Y = F(K,(1 - u) EL) exhibits constant returns to scale, then output (Y) will double if:

When capital increases by Δ\DeltaΔ K units, output increases by:

Endogenous growth theory rejects the assumption of exogenous:

Schumpeter's thesis of "creative destruction" is an explanation of economic progress resulting from:

The productivity slowdown that began in the 1970s has been attributed, at least partly, to each of the following except:

If capital grows at 3 percent per year and labor grows at 1 percent per year, and capital's share is 1/3 while labor's share is 2/3, if there is no technological progress and the neoclassical assumptions hold, the growth rate of output will be:

In the two-sector endogenous growth model, the saving rate (s) affects the steady-state:

In the two-sector endogenous growth model, income growth persists because:

In the two-sector endogenous growth model, the steady-state stock of physical capital is determined by _____, and the growth in the stock of knowledge is determined by _____.

In the Solow growth model, capital exhibits ______ returns. In the basic endogenous growth model, capital exhibits ______ returns.

The endogenous growth model's assumption of constant returns to capital is more plausible if capital is defined to include:

In the Solow growth model, technological change is ______, whereas in endogenous growth theories, technological change is ______.

When capital increases by Δ\DeltaΔ K units and labor increases by Δ\DeltaΔ L units, output ( Δ\DeltaΔ Y) increases by:

In the basic endogenous growth model, income can grow forever-even without exogenous technological progress-because:

Empirical results justify substantial government subsidies to research based on the finding that the:

When capital increases by $\Delta$ K units, output increases by:

In the two-sector endogenous growth model, the steady-state stock of physical capital is determined by _, and the growth in the stock of knowledge is determined by _.

In the Solow growth model, capital exhibits returns. In the basic endogenous growth model, capital exhibits returns.

In the Solow growth model, technological change is , whereas in endogenous growth theories, technological change is .

When capital increases by $\Delta$ K units and labor increases by $\Delta$ L units, output ( $\Delta$ Y) increases by: