Question 1

Given the information above, which of the following represents the amount of investment per effective worker needed to maintain a constant level of capital per effective worker (K/AN)?

Accepted Answer

The amount of investment per effective worker needed to maintain a constant level of capital per effective worker (K/AN) is represented by the depreciation rate plus the rate of growth of the effective workers, which typically includes both the growth rate of the population and the rate of technological progress. Without specific rates provided, the correct choice cannot be determined from the information given. However, if option A) 0.22(K/AN) is considered correct, it suggests that this rate (22%) is assumed to be the sum of the depreciation rate and the growth rates, making it the necessary investment rate to keep capital per effective worker constant.

Question 2

Graphically illustrate and explain the effects of an increase in population growth on the Solow- Swan growth model. In your answer, you must clearly label all curves and the initial and final equilibria. In your answer, explain what happens to the rate of growth of output per worker and the rate of growth of output as the economy adjusts to this event.

Accepted Answer

The answer of Graphically illustrate and explain the effects of...

Question 3

High growth in the rich countries from 1985 to 2010 was most likely due to:

Accepted Answer

High technological progress is the most likely explanation for high growth in rich countries from 1985 to 2010. This is because technological advancements have contributed to an increase in productivity and efficiency in production, leading to economic growth. The other choices, such as high capital accumulation, destruction of capital during World War II, high population growth, and a high saving rate, are either less likely or not as significant factors as technological progress.

Question 4

Discuss the relative strengths of capital accumulation and technological progress in contributing to output growth rates in Australia during 1985- 2009. What are the long- run implications?

Accepted Answer

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Question 5

Discuss the different nature of technological progress between more advanced economies and less advanced economies. How is technological progress in less advanced economies connected to convergence to more advanced economies?

Accepted Answer

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Question 6

The method of constructing a measure of technological progress relies on which of the following assumptions?

Accepted Answer

The method of constructing a measure of technological progress relies on the assumption that each factor of production is paid its marginal product. This assumption ensures that the returns to factors of production are equal to the value that they contribute to output, thereby allowing for an accurate assessment of the technological progress that has been made. The other choices (A, B, D, and E) are not relevant to this particular assumption.

Question 7

Assume that a fiscal policy action results in a decrease in the saving rate. This decrease in the saving rate will cause a decrease in which of the following once the economy reaches its new steady state equilibrium?

Accepted Answer

A decrease in the saving rate affects the level of capital and output in the long run, but it does not affect the growth rates of output, capital per worker, or total capital once the economy reaches its new steady state. Growth rates in the long run are determined by factors like technological progress and population growth, not by the saving rate.

Question 8

Suppose output per worker in a country has grown at the same rate as technology for over many years. This country's growth would be described as:

Accepted Answer

"Balanced" growth would be the most appropriate description for a country whose output per worker has grown at the same rate as technology for many years. This suggests that the country has been able to maintain a balance between technological progress and growth in output, which is a desirable outcome. The other choices ("effective," "optimal," "diffuse," and "appropriable") do not accurately capture this idea.

Question 9

Assume that an economy experiences both positive population growth and technological progress. In this economy, which of the following is constant when balanced growth is achieved?

Accepted Answer

When balanced growth is achieved, the variables will grow at the same rate so the ratio of output per worker (Y/AN) will remain constant. The level of capital per worker (K/N) will likely increase, but not necessarily at a constant rate. Therefore, the best choice is D.

Question 10

Use the following information to answer the question(s) below:
6 = 0.13
gA = 0.05
gN = 0.04
-Given the information above, the steady state rate of growth of output per worker is:

Accepted Answer

The answer of Use the following information to answer the...

Question 11

Among the reasons that the poor countries have been unable to close the "technology gap" with the rich countries is:

Accepted Answer

All of the above factors - poorly established property rights, low education levels, and poorly developed financial markets - have contributed to the inability of poor countries to close the technology gap with rich countries. Without clear property rights, it may be difficult for individuals or companies to invest in new technologies, and low education levels can limit the pool of skilled workers able to develop and implement new technologies. Poorly developed financial markets can also make it more difficult for businesses to access the funds they need to invest in new technology.

Question 12

Which of the following is always true after an economy reaches a balanced growth equilibrium?

Accepted Answer

In a balanced growth equilibrium, the growth rate of capital must equal the growth rate of the effective workforce to maintain equilibrium. This ensures that the ratio of capital to effective labor remains constant over time, allowing for sustained economic growth without imbalances between the supply of capital and labor.

Question 13

Assume the production function is represented by Y = F (K, AN) and the number of workers is constant. Now suppose the state of technology variable, A, increases by 6%. This implies that which of the following variables will also increase by 6%?

Accepted Answer

The answer of Assume the production function is represented by...

Question 14

Graphically illustrate and explain the effects of a decrease in the saving rate on the Solow- Swan growth model. In your answer, you must clearly label all curves and the initial and final equilibria. In your answer, explain what happens to the rate of growth of output per worker and the rate of growth of output as the economy adjusts to this event.

Accepted Answer

The answer of Graphically illustrate and explain the effects of...

Question 15

Use the information below to answer the following question(s):
1() the rate of depreciation is 14% per year,
2() the population growth rate is 4% per year, and
3() the growth rate of technology is 5% per year.
-Refer to the information above. Which of the following represents the steady- state growth rate of output in this economy?

Accepted Answer

The steady-state growth rate of output is given by the formula: 
steady-state growth rate of output = population growth rate + technology growth rate - rate of depreciation 
= 4% + 5% - 14% 
= -5% + 9% 
= 4%
Therefore, the steady-state growth rate of output in this economy is 4%, which is option D.

Question 16

Suppose there is an increase in the saving rate. Explain what effect this increase in the saving rate will have on the rate of growth of output per worker.

Accepted Answer

The answer of Suppose there is an increase in the...

Question 17

Refer to the information above. Which of the following represents the level of investment needed to maintain constant capital per effective worker (K/AN) in this economy?

Accepted Answer

The answer of Refer to the information above. Which of...

Question 18

Convergence of output per capita across countries has come from:

Accepted Answer

The Solow growth model suggests that technological progress is the main driver behind long-term economic growth, and it is likely that countries that started behind have had to adopt and adapt technologies from countries that were already ahead. This has led to a convergence of output per capita across countries. Accumulation of capital (A), depreciation rates (B), saving rates (D), and population growth (E) may have some impact on output per capita, but they are not the main drivers of convergence.

Question 19

The source of growth for Australia from 1985- 2009 has mainly come from:

Accepted Answer

The answer of The source of growth for Australia from...

Question 20

Explain what is meant by the fertility and appropriability of the research process.

Accepted Answer

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Quiz 12: Technological Progress and Growth

Given the information above, which of the following represents the amount of investment per effective worker needed to maintain a constant level of capital per effective worker (K/AN) ?