Question 1

In the Lewis model,in the capitalist sector,worker are paid the value of marginal product of labor is

Accepted Answer

A

Question 2

In the Harrod-Domar growth model,if the saving rate s increases,what will happen to the long-run growth rate of GDP?

Accepted Answer

According to the Harrod-Domar growth model, the long-run growth rate of GDP is directly proportional to the saving rate. Therefore, if the saving rate (s) increases, the long-run growth rate of GDP will also increase.

Question 3

In the Harrod-Domar growth model,if the depreciation rate d increases,what will happen to the long-run growth rate of GDP?

Accepted Answer

According to the Harrod-Domar growth model, the long-run growth rate of GDP is equal to the savings rate divided by the capital-output ratio. An increase in the depreciation rate d means that capital is depreciating faster, which increases the capital-output ratio. This, in turn, decreases the long-run growth rate of GDP. Therefore, the correct answer is B) it decreases.

Question 4

Using the Harrod-Domar growth model,suppose the saving rate for an economy is given.If the aggregate production becomes more capital intensive,the capital-output ratio v will ________ and the long-run growth rate of GDP will ________.

Accepted Answer

According to the Harrod-Domar growth model, the long-run growth rate of GDP is directly proportional to the savings rate and inversely proportional to the capital-output ratio. If the aggregate production becomes more capital intensive, it means that more capital is required to produce the same amount of output. Therefore, the capital-output ratio, v, will increase. As a result, the long-run growth rate of GDP will decrease according to the Harrod-Domar growth model. Thus, the correct option is C, which states that the capital-output ratio will increase, and the long-run growth rate of GDP will decrease.

Question 5

Capital fundamentalism refers to the belief that the most important proximate source of economic growth is the accumulation of ________.

Accepted Answer

Capital fundamentalism suggests that economic growth is primarily driven by the accumulation of physical capital such as buildings, machinery, and equipment. This viewpoint often prioritizes investment in physical capital over other factors such as human capital or technology.

Question 6

Using the Harrod-Domar growth model,suppose one economy has to maintain a growth rate of GDP of 10 percent per year in order to avoid a decline in the average standard of living.Assume in this economy,the saving rate s is fixed at 15%,the capital-output ratio v is 3 and the depreciation rate d is 5%,the gap of ________ in the growth rate of GDP can be provided by foreign aid.

Accepted Answer

The answer of Using the Harrod-Domar growth model,suppose one economy...

Question 7

Dualism refers to the belief that developing economies must be understood as having two sectors,traditional and modern,each with peculiar characteristics and very different growth prospects.Which sector has more potential for improving their productivity?

Accepted Answer

The modern sector generally has more potential for improving productivity due to its adoption of modern technology and greater efficiency in production processes. The traditional sector, on the other hand, often relies on manual labor and outdated methods, limiting its potential for growth and productivity improvements.

Question 8

In the Lewis model,after the structural change,the output from the subsistence sector will ________ and the output from the capitalist sector will ________.

Accepted Answer

The answer of In the Lewis model,after the structural change,the...

Question 9

In an economic model:

Accepted Answer

In an economic model, exogenous variables are assumed to influence endogenous variables. Endogenous variables, on the other hand, are determined within the model and are affected by changes in exogenous variables. Therefore, D is the correct choice.

Question 10

Using the Harrod-Domar growth model,suppose one economy has to maintain a growth rate of GDP of 10 percent per year in order to avoid a decline in the average standard of living.Assume in this economy,the capital-output ratio v is 3 and the depreciation rate d is 5%,what is the required saving rate?

Accepted Answer

The answer of Using the Harrod-Domar growth model,suppose one economy...

Question 11

The structural change that accompanies growth in the Lewis model is a shifting of labor from ________ to ________.

Accepted Answer

According to the Lewis model, as the capitalist sector grows, it creates more job opportunities and higher wages than the subsistence sector. This incentivizes workers to shift from subsistence agriculture to the modern sector. Therefore, the structural change that accompanies growth in the Lewis model is a shifting of labor from the subsistence sector to the capitalist sector.

Question 12

According to the Lewis model,workers are paid a wage that is ________ in the capitalist sector.

Accepted Answer

According to the Lewis model, workers in the capitalist sector are paid a wage that is equal to the subsistence wage plus a premium to compensate for moving. This additional compensation is required because the rural workers who move to the cities often face higher living expenses and additional costs associated with relocation, so their wages must be higher to enable a decent standard of living. The market determines the subsistence wage, but the premium is based on additional factors like migration costs and living expenses.

Question 13

According to the Harrod-Domar growth model,suppose that the saving rate is 12 percent,the capital-output ratio is 2,and the depreciation rate d is 4 percent,what is the expected long-run growth rate of GDP?

Accepted Answer

The Harrod-Domar growth model states that the long-run growth rate of GDP (g) is equal to the investment rate (s) divided by the capital-output ratio (k), minus the depreciation rate (d). 
Thus, using the given values: 
g = (s/k) - d 
= (0.12/2) - 0.04 
= 0.06 - 0.04 
= 0.02 or 2% 
Therefore, the expected long-run growth rate of GDP is 2%. Thus, the answer is C.

Question 14

In the Lewis model,in the subsistence sector,the value of marginal product of labor is

Accepted Answer

In the Lewis model of economic development, the subsistence sector is characterized by a surplus of labor, meaning that adding an additional worker does not increase overall output. Therefore, the value of the marginal product of labor in this sector is considered to be zero.

Question 15

The Neoclassical growth model assumes:

Accepted Answer

The Neoclassical growth model assumes diminishing marginal returns, meaning that each additional unit of capital or labor results in proportionally smaller increases in output. This assumption is critical to the model's prediction that economies converge to a steady-state level of output and consumption per capita.

Answer: B 
 The Neoclassical growth model assumes that population is constant, meaning that there is no growth or decline in the number of individuals in the economy. This assumption allows for a focus on the accumulation of capital and technological progress as the primary drivers of economic growth.

Answer: C 
 The Neoclassical growth model assumes endogenous technological improvement, meaning that technological progress is driven by decisions made by households and firms in response to market incentives. This assumption is critical to the model's prediction that economies can achieve sustained economic growth over the long run.

Answer: D 
 The Neoclassical growth model does not assume that labor is in surplus or any specific labor market condition. Rather, it assumes that factors of production, including labor, can be combined with capital in flexible ways to generate output.

Question 16

What is the main difference between the Harrod-Domar growth model and the Neoclassical growth model?

Accepted Answer

The Harrod-Domar model assumes fixed proportions production technology, while the Neoclassical growth model allows for variable proportions and diminishing returns to capital.

Question 17

According to the Lewis model,workers are paid a wage that is ________ in the subsistence sector.

Accepted Answer

According to Lewis model, wages in the subsistence sector are fixed at a minimum level by tradition and are not determined by labor demand and supply or equal to the marginal product of labor. Workers in the subsistence sector are usually paid in-kind rather than through wages.

Question 18

Endogenous variables are:

Accepted Answer

Endogenous variables are those that are determined by the model itself through the system of equations. They are not given from outside the model, nor are they assumptions or fixed values.

Question 19

What is the main difference between the Harrod-Domar growth model and the Lewis growth model?

Accepted Answer

The answer of What is the main difference between the...

Question 20

In the Harrod-Domar growth model,suppose the model is in stable status,which means $$s / v - d$$ is just equal to n,total GDP would ________ and GDP per capita would ________.

Accepted Answer

In the Harrod-Domar model, when the growth rate of output (s/v - d) equals the population growth rate (n), total GDP increases at the same rate as the population, keeping GDP per capita constant.

Quiz 4: Economic Growth Theory in Historical Perspective

In the Lewis model,in the capitalist sector,worker are paid the value of marginal product of labor is

In the Harrod-Domar growth model,if the saving rate s increases,what will happen to the long-run growth rate of GDP?

In the Harrod-Domar growth model,if the depreciation rate d increases,what will happen to the long-run growth rate of GDP?

Using the Harrod-Domar growth model,suppose the saving rate for an economy is given.If the aggregate production becomes more capital intensive,the capital-output ratio v will and the long-run growth rate of GDP will .

Capital fundamentalism refers to the belief that the most important proximate source of economic growth is the accumulation of ________.

Dualism refers to the belief that developing economies must be understood as having two sectors,traditional and modern,each with peculiar characteristics and very different growth prospects.Which sector has more potential for improving their productivity?

In the Lewis model,after the structural change,the output from the subsistence sector will and the output from the capitalist sector will .

In an economic model:

Using the Harrod-Domar growth model,suppose one economy has to maintain a growth rate of GDP of 10 percent per year in order to avoid a decline in the average standard of living.Assume in this economy,the capital-output ratio v is 3 and the depreciation rate d is 5%,what is the required saving rate?

The structural change that accompanies growth in the Lewis model is a shifting of labor from to .

According to the Lewis model,workers are paid a wage that is ________ in the capitalist sector.

According to the Harrod-Domar growth model,suppose that the saving rate is 12 percent,the capital-output ratio is 2,and the depreciation rate d is 4 percent,what is the expected long-run growth rate of GDP?

In the Lewis model,in the subsistence sector,the value of marginal product of labor is

The Neoclassical growth model assumes:

What is the main difference between the Harrod-Domar growth model and the Neoclassical growth model?

According to the Lewis model,workers are paid a wage that is ________ in the subsistence sector.

Endogenous variables are:

What is the main difference between the Harrod-Domar growth model and the Lewis growth model?

In the Harrod-Domar growth model,suppose the model is in stable status,which means $s / v - d$ is just equal to n,total GDP would and GDP per capita would .

Quiz 4: Economic Growth Theory in Historical Perspective

In the Lewis model,in the capitalist sector,worker are paid the value of marginal product of labor is

In the Harrod-Domar growth model,if the saving rate s increases,what will happen to the long-run growth rate of GDP?

In the Harrod-Domar growth model,if the depreciation rate d increases,what will happen to the long-run growth rate of GDP?

Using the Harrod-Domar growth model,suppose the saving rate for an economy is given.If the aggregate production becomes more capital intensive,the capital-output ratio v will ________ and the long-run growth rate of GDP will ________.

Capital fundamentalism refers to the belief that the most important proximate source of economic growth is the accumulation of ________.

Dualism refers to the belief that developing economies must be understood as having two sectors,traditional and modern,each with peculiar characteristics and very different growth prospects.Which sector has more potential for improving their productivity?

In the Lewis model,after the structural change,the output from the subsistence sector will ________ and the output from the capitalist sector will ________.

In an economic model:

The structural change that accompanies growth in the Lewis model is a shifting of labor from ________ to ________.

According to the Lewis model,workers are paid a wage that is ________ in the capitalist sector.

According to the Harrod-Domar growth model,suppose that the saving rate is 12 percent,the capital-output ratio is 2,and the depreciation rate d is 4 percent,what is the expected long-run growth rate of GDP?

In the Lewis model,in the subsistence sector,the value of marginal product of labor is

The Neoclassical growth model assumes:

What is the main difference between the Harrod-Domar growth model and the Neoclassical growth model?

According to the Lewis model,workers are paid a wage that is ________ in the subsistence sector.

Endogenous variables are:

What is the main difference between the Harrod-Domar growth model and the Lewis growth model?

In the Harrod-Domar growth model,suppose the model is in stable status,which means s/v−ds / v - ds/v−d is just equal to n,total GDP would ________ and GDP per capita would ________.

Using the Harrod-Domar growth model,suppose the saving rate for an economy is given.If the aggregate production becomes more capital intensive,the capital-output ratio v will and the long-run growth rate of GDP will .

In the Lewis model,after the structural change,the output from the subsistence sector will and the output from the capitalist sector will .

The structural change that accompanies growth in the Lewis model is a shifting of labor from to .

In the Harrod-Domar growth model,suppose the model is in stable status,which means $s / v - d$ is just equal to n,total GDP would and GDP per capita would .