Deck 5: Conditional Convergence and Long-Run Economic Growth

Question 1

In the Solow growth model transition, the growth rate of output per worker is negatively related to:

A)the initial capital stock per worker, k(0).
B) y/y.
C)the optimum output per worker, y*
D)all of the above.

Answer 1

the initial capital stock per worker, k(0).

Question 2

In the Solow growth model transition, the growth rate of capital per worker is negatively related to:

A)the initial capital stock per worker, k(0).
B) k/k.
C)the optimum output per worker, k*
D)all of the above.

Answer 2

the initial capital stock per worker, k(0).

Question 3

In the key equation for convergence , k* is:

A)the initial level of capital.
B)the initial level of capital per worker.
C)the optimum level of capital.
D)the optimum level of capital per worker.

Answer 3

the optimum level of capital per worker.

Question 4

In the key equation for convergence , y* is:

A)the initial level of output.
B)the initial level of output per worker.
C)the optimum level of output.
D)the optimum level of output per worker.

Question 5

In the Solow growth model the growth rate of capital per worker is positively related to the initial level of capital per worker.

Question 6

The Solow growth model with technological progress has continuous output per worker growth in the steady state.

Question 7

In the key equation for convergence , y(0) is:

A)the initial level of output.
B)the initial level of output per worker.
C)the optimum level of output.
D)the optimum level of output per worker.

Question 8

In the Solow growth model transition, the growth rate of output per worker is positively related to:

A)the initial capital stock per worker, k(0).
B) y/y.
C)the optimum output per worker, y*
D)all of the above.

Question 9

Convergence can be seen in the data of all countries together if one holds constant:

A)the saving rate.
B)the fertility rate.
C)the degree the rule of law is maintained.
D)all of the above.

Question 10

Ideas are rival goods.

Question 11

Governments grant patents and copyrights to encourage firms to engage in research and development.

Question 12

In the Solow growth model, the growth rate of capital per worker is positively related to the optimum capital per worker.

Question 13

The key equation for conditional convergence for output per worker is:

A)
B)Y = A•F(K,L)
C)
D)

Question 14

Conditional convergence is the tendency of economies to converge:

A)all the time.
B)when they are similar.
C)only when economic conditions are good.
D)only when currencies are stable.

Question 15

Convergence can be seen in the data of all countries together if one holds constant:

A)the degree that democracy is maintained.
B)changes in the terms of trade.
C)the average rate of inflation.
D)all of the above.

Question 16

Absolute convergence is the tendency of economies to converge:

A)all the time.
B)when they are similar.
C)only when economic conditions are good.
D)only when currencies are stable.

Question 17

Convergence can be seen in the data of all countries together if one holds constant:

A)the size of government.
B)the extent of international openness.
C)investment in education and health.
D)all of the above.

Question 18

In the key equation for convergence , k(0) is:

A)the initial level of capital.
B)the initial level of capital per worker.
C)the optimum level of capital.
D)the optimum level of capital per worker.

Question 19

The key equation for conditional convergence for capital per worker is:

A)
B)Y = A•F(K,L)
C)
D)

Question 20

In the Solow growth model transition, the growth rate of capital per worker is positively related to:

A)the initial capital stock per worker, k(0).
B) k/k.
C)the optimum output per worker, k*
D)all of the above.

Question 21

If sA > s + n in the model with constant average product of capital, the long run growth rate is:

A)constant.
B)positive
C)negative.
D)cyclical.

Question 22

In the Solow growth model, the long run rate of growth of output per worker is:

A)zero
B)negative.
C)cyclical.
D)positive.

Question 23

A problem with the constant average product of capital growth model is that:

A)a common view among economist is that the average product of capital eventually starts to fall as capital rises.
B)output per worker grows in the long run.
C)the Y/K ratio grows.
D)all of the above.

Question 24

To encourage firms to engage in research and development (R&D), governments grant temporary monopolies in the production of the word or symbol based goods like books and computer code that result from R&D called:

A)cartels.
B)copyrights.
C)anti-trust exemptions.
D)all of the above.

Question 25

The private return from research and development might be less than the social return because:

A)others than just the inventor can use inventions that come out of research and development.
B)it is encouraged by patents and copyrights.
C)it is funded by the government.
D)all of the above.

Question 26

An example of a non-rival good is:

A)an output like a pizza.
B)a machine like a printing press.
C)an idea like a new chemical formula for a drug.
D)all of the above.

Question 27

An example of non-rival good is:

A)mathematical formulas in calculus.
B)a machine like a laser printer.
C)an output like a dress.
D)all of the above.

Question 28

An example of a non-rival good is:

A)an output like a shirt.
B)code for computer software.
C)a structure like a factory.
D)all of the above.

Question 29

In the Solow growth model with technological progress,

A)k* is constant.
B)k* is growing
C)k* is cyclical.
D)k* is declining.

Question 30

In the Solow growth model with technological progress in the optimal amount of capital per worker is

A)growing.
B)shrinking.
C)cyclical.
D)fluctuating.

Question 31

If sA > s + n in the model with constant average product of capita, the long run growth rate is:

A)
B)Ak
C)sA - (s +N)
D)none of the above.

Question 32

An example of a rival capital good is:

A)an employee like an R&D engineer.
B)a machine like a printing press.
C)a structure like a factory.
D)all of the above.

Question 33

The rewards to private R&D depend on:

A)the costs of R&D.
B)the rewards from the results of R&D.
C)the security of intellectual property rights.
D)all of the above.

Question 34

A growth model with continuing output per worker growth in the long run is:

A)the production function.
B)the Ak model of constant average product of capital.
C)the Solow growth model.
D)all of the above.

Question 35

To encourage firms to engage in research and development (R&D), governments grant temporary monopolies in the production of the goods that result from R&D called:

A)patents.
B)land grants.
C)anti-trust exemptions.
D)all of the above.

Question 36

In endogenous growth models, technological progress comes from:

A)outside the system.
B)research and development.
C)increases in the capital stock.
D)all of the above.

Question 37

An example of a non-rival good is:

A)mathematical formulas in calculus.
B)codes for computer software.
C)an idea like a new chemical formula for a drug.
D)all of the above.

Question 38

An example of a rival capital good is:

A)infrastructure like roads.
B)a machine like a printing press.
C)an idea like a new chemical formula for a drug.
D)all of the above.

Question 39

A problem with the constant average product of capital growth model is that:

A)output per worker grows in the long run.
B)there is no convergence.
C)the Y/K ratio grows.
D)all of the above.

Question 40

In the Solow growth model with technological progress in the steady state:

A)capital per worker is constant.
B)capital per worker is cyclical.
C)capital per worker is increasing.
D)capital per worker is declining.

Question 41

What happens when exogenous technological change is modeled in the Solow growth model?

Question 42

A business may not seek a patent on an idea or invention because:

A)patents are not valuable.
B)approval is costly.
C)ideas and inventions are non-rival.
D)all of the above.

Question 43

With steady state growth:

A)the optimal output per worker grows faster than optimal capital per worker.
B)the steady state growth rate of real GDP per worker is less than the rate of technological progress.
C)the average product of capital is constant.
D)all of the above.

Question 44

If intellectual property rights become better secured, then:

A)the costs of R&D are greater.
B)the costs of R&D are smaller.
C)the private returns to R&D are greater.
D)the private returns to R&D are smaller.

Question 45

What is conditional convergence?

Question 46

With steady state growth:

A)there is absolute convergence.
B)y/k is constant.
C)k* growth fluctuates.
D)all of the above.

Question 47

Steady state growth is when:

A)when the average product of capital, y/k, is unchanging as k increases at a constant rate.
B)when the rate of growth of capital per worker is constant at zero.
C)when the rate growth of output per worker is constant at zero.
D)all of the above.

Question 48

What are the steady-state growth results of a constant average product of capital model of growth and what are the problems of such a model?

Question 49

What is the key equation for conditional convergence and what are the direction of influences?

Question 50

With steady state growth:

A)the optimal output per worker grows faster than the optimal capital per worker.
B)the steady state growth rate of real GDP per worker is greater than the rate of technological progress.
C)the average product of capital is falling.
D)all of the above.

Question 51

With steady state growth:

A)( y/y)* = ( k/k)*
B)y/k is constant.
C)( y/y)*= g/(1- )
D)all of the above.

Question 52

With steady state growth:

A)( y/y)* = ( k/k)*.
B)k* = 0.
C)y* = 0.
D)all of the above.

Question 53

With steady state growth:

A)the optimal output per worker and capital per worker grow at the same rate.
B)the steady state growth rate of real GDP per worker is equal to the rate of technological progress.
C)the average product of capital falls.
D)all of the above.

Question 54

With steady state growth:

A)k* growth fluctuates.
B)there is absolute convergence.
C)( y/y)*= g/(1- )
D)all of the above.

Question 55

The rewards to private R&D are positively related to:

A)the costs of R&D.
B)growth rate of capital per worker.
C)the security of intellectual property rights.
D)all of the above.

Question 56

The ability to control the inventions from R&D spending is known as

A)greed.
B)a rival good.
C)intellectual property rights.
D)all of the above.

Question 57

With steady state growth:

A)the optimal output per worker and capital per worker grow at the same rate.
B)the steady state growth rate of real GDP per worker is greater than the rate of technological progress.
C)the average product of capital is constant.
D)all of the above.

Question 58

Diffusion of technology means:

A)how many industries a technology can be used in.
B)describes the imitation and adaptation of technology from country to country.
C)how expensive a technology is.
D)how many scientists had to work on a technology.

Question 59

The rewards to private R&D are negatively related to:

A)the costs of R&D.
B)the rewards from the results of R&D.
C)the security of intellectual property rights.
D)all of the above.

Question 60

What variables must be held constant to find convergence in the data on all countries.