Question 1

The Solow residual found by the growth accounting method is:

Accepted Answer

The Solow residual, also known as total factor productivity, measures the portion of output growth that cannot be explained by the accumulation of inputs such as labor and capital, thus reflecting the effects of technological progress or changes in efficiency.

Question 2

According to the growth accounting methodology, total factor productivity improvements are measured by:

Accepted Answer

The Solow residual is a measure of total factor productivity improvements in the growth accounting methodology. It represents the portion of output growth that cannot be explained by the growth in inputs of labor and capital, thus attributing it to increases in efficiency or technology.

Question 3

If the labour-income is 2/3 of national income, the basic growth accounting equation is:

Accepted Answer

The basic growth accounting equation, which breaks down the growth rate of an economy's total output into contributions from technological progress, labor, and capital, is given by ?Y/Y = ?A/A + α(?L/L) + (1-α)(?K/K), where α represents the share of labor income in national income. Given that labor income is 2/3 of national income, α = 2/3, making the correct equation ?Y/Y = ?A/A + (2/3 x ?L/L) + (1/3 x ?K/K).

Question 4

Consider an economy with a two-variable production function with labour-income-share at 2/3 and capital-income-share at 1/3. If capital and technology remain constant and if L grows at 3%, the growth of real GDP will be:

Accepted Answer

The answer of Consider an economy with a two-variable production...

Question 5

Consider an economy with a two-variable production function with labour-income-share at 2/3 and capital-income-share at 1/3. Assume that growth rate of real GDP is 5%. If both K and L grow at 3%, the growth of total factor productivity will be:

Accepted Answer

The growth of total factor productivity (TFP) can be calculated using the formula: Growth of TFP = Growth of GDP - (alpha * Growth of Labor) - ((1-alpha) * Growth of Capital), where alpha is the labor-income-share. Substituting the given values: Growth of TFP = 5% - (2/3 * 3%) - (1/3 * 3%) = 5% - 2% - 1% = 2%.

Question 6

Labour inputs can be used to increase output:

Accepted Answer

Labour inputs can indeed increase output both because production typically increases with more labour (up to a point) and because investing in human capital (education, training, etc.) can increase the productivity of labour, potentially at an increasing rate. Fixed proportions with capital inputs (option C) is not a universal rule for how labour inputs can be used to increase output.

Question 7

All of the following are important sources of growth except:

Accepted Answer

Government planning is not typically considered a direct source of economic growth, unlike financial institutions, technological development, and entrepreneurship, which directly contribute to economic expansion and innovation.

Question 8

In explaining sustained growth in potential output empirically, increased:

Accepted Answer

Empirical studies and economic theories often highlight technology as the most crucial element for sustained growth in potential output. Technological advancements drive productivity improvements, enabling economies to produce more with the same amount of labor and capital.

Question 9

Constant returns to scale occur whenever all factors of production in an economic system increase in the same proportion and:

Accepted Answer

Constant returns to scale are characterized by an output increase that is exactly proportional to the increase in inputs, meaning if all inputs are doubled, output also doubles.

Question 10

Suppose the production function is Y = A x F(L, K). If all inputs are doubled and output also doubles, then there are ________ returns to scale and ____________returns of L

Accepted Answer

The production function exhibits constant returns to scale when doubling all inputs leads to a doubling of output. The question does not provide enough information to determine the returns of L (labor), so the second part cannot be directly answered from the given information. However, the correct format for the answer based on the provided options and typical interpretation would be constant returns to scale, as indicated by the doubling of inputs and outputs.

Question 11

Which of the following statements is false?

Accepted Answer

The statement in C is false because constant returns to scale refer to a proportional increase in output relative to inputs, not to the constant marginal productivity of labor, which is a different concept.

Question 12

Suppose the inputs of labour and capital each increase by 10% and output also increases by 10%. The production function exhibits __________ returns to scale.

Accepted Answer

When both inputs (labour and capital) increase by 10% and output also increases by 10%, it indicates that the production function exhibits constant returns to scale. This means that the increase in inputs leads to a proportional increase in output.

Question 13

Suppose the inputs of labour and capital each increase by 10 percent and output also increases by 10 percent. In that case:

Accepted Answer

The Solow residual measures the portion of output not explained by the input amounts of labor and capital, essentially capturing the effects of technological progress or efficiency gains. If output increases by the same proportion as the inputs (labor and capital), it indicates that the increase in output is fully accounted for by the increase in inputs, with no change in productivity or technology efficiency. Thus, the Solow residual is zero, as there are no unexplained factors contributing to the increase in output.

Question 14

Assume employment income is 2/3 of net domestic income
 
-Refer to Table 14.1. According to the information in then table, in the period 2005-2010 the effect of changes in technology on output growth as measured by the Solow residual was:

Accepted Answer

The answer of Assume employment income is 2/3 of net...

Question 15

Assume employment income is 2/3 of net domestic income
 
-Refer to Table 14.1. According to the information in the table, changes in technology increased total factor productivity in:

Accepted Answer

Changes in technology increased total factor productivity in 2010 - 2015.

Question 16

Assume employment income is 2/3 of net domestic income
 
-Refer to Table 14.1. According to the information in the table, improvements in technology increased total factor productivity and potential output by 7%:

Accepted Answer

Improvements in technology increased total factor productivity and potential output by 7% in the period 2010 - 2015.

Question 17

A likely source of economic growth would be:

Accepted Answer

All of the options listed are likely sources of economic growth. Improvements in the quality and quantity of resources, as well as advancements in technology, can all contribute to increased production capabilities, thereby fostering economic growth.

Question 18

Greater labour force participation by women increases measured growth and potential output most directly by:

Accepted Answer

Greater labour force participation by women directly increases the availability of labor resources by adding more workers to the economy, which can enhance productivity and potential output.

Question 19

The most frequently used measure of productivity is:

Accepted Answer

The most frequently used measure of productivity is the output produced by a unit of labour in a given time period, often referred to as labor productivity. It measures how efficiently labor is used in the production process.

Question 20

If the aggregate production function is Y = A x F(L,K), then the per-worker production function is:

Accepted Answer

The per-worker production function is obtained by dividing the aggregate production function by the number of workers (L), leading to Y/L = A x F(K/L), which represents output per worker as a function of capital per worker.

Quiz 14: International Macroeconomics

The Solow residual found by the growth accounting method is:

According to the growth accounting methodology, total factor productivity improvements are measured by:

If the labour-income is 2/3 of national income, the basic growth accounting equation is:

Consider an economy with a two-variable production function with labour-income-share at 2/3 and capital-income-share at 1/3. If capital and technology remain constant and if L grows at 3%, the growth of real GDP will be:

Consider an economy with a two-variable production function with labour-income-share at 2/3 and capital-income-share at 1/3. Assume that growth rate of real GDP is 5%. If both K and L grow at 3%, the growth of total factor productivity will be:

Labour inputs can be used to increase output:

All of the following are important sources of growth except:

In explaining sustained growth in potential output empirically, increased:

Constant returns to scale occur whenever all factors of production in an economic system increase in the same proportion and:

Suppose the production function is Y = A x F(L, K) . If all inputs are doubled and output also doubles, then there are returns to scale and ____returns of L

Which of the following statements is false?

Suppose the inputs of labour and capital each increase by 10% and output also increases by 10%. The production function exhibits __________ returns to scale.

Suppose the inputs of labour and capital each increase by 10 percent and output also increases by 10 percent. In that case:

Assume employment income is 2/3 of net domestic income -Refer to Table 14.1. According to the information in then table, in the period 2005-2010 the effect of changes in technology on output growth as measured by the Solow residual was:

Assume employment income is 2/3 of net domestic income -Refer to Table 14.1. According to the information in the table, changes in technology increased total factor productivity in:

Assume employment income is 2/3 of net domestic income -Refer to Table 14.1. According to the information in the table, improvements in technology increased total factor productivity and potential output by 7%:

A likely source of economic growth would be:

Greater labour force participation by women increases measured growth and potential output most directly by:

The most frequently used measure of productivity is:

If the aggregate production function is Y = A x F(L,K) , then the per-worker production function is:

Quiz 14: International Macroeconomics

The Solow residual found by the growth accounting method is:

According to the growth accounting methodology, total factor productivity improvements are measured by:

If the labour-income is 2/3 of national income, the basic growth accounting equation is:

Consider an economy with a two-variable production function with labour-income-share at 2/3 and capital-income-share at 1/3. If capital and technology remain constant and if L grows at 3%, the growth of real GDP will be:

Consider an economy with a two-variable production function with labour-income-share at 2/3 and capital-income-share at 1/3. Assume that growth rate of real GDP is 5%. If both K and L grow at 3%, the growth of total factor productivity will be:

Labour inputs can be used to increase output:

All of the following are important sources of growth except:

In explaining sustained growth in potential output empirically, increased:

Constant returns to scale occur whenever all factors of production in an economic system increase in the same proportion and:

Suppose the production function is Y = A x F(L, K) . If all inputs are doubled and output also doubles, then there are ________ returns to scale and ____________returns of L

Which of the following statements is false?

Suppose the inputs of labour and capital each increase by 10% and output also increases by 10%. The production function exhibits __________ returns to scale.

Suppose the inputs of labour and capital each increase by 10 percent and output also increases by 10 percent. In that case:

Assume employment income is 2/3 of net domestic income -Refer to Table 14.1. According to the information in then table, in the period 2005-2010 the effect of changes in technology on output growth as measured by the Solow residual was:

Assume employment income is 2/3 of net domestic income -Refer to Table 14.1. According to the information in the table, changes in technology increased total factor productivity in:

Assume employment income is 2/3 of net domestic income -Refer to Table 14.1. According to the information in the table, improvements in technology increased total factor productivity and potential output by 7%:

A likely source of economic growth would be:

Greater labour force participation by women increases measured growth and potential output most directly by:

The most frequently used measure of productivity is:

If the aggregate production function is Y = A x F(L,K) , then the per-worker production function is:

Suppose the production function is Y = A x F(L, K) . If all inputs are doubled and output also doubles, then there are returns to scale and ____returns of L