Question 1

The number of effective workers takes into account the number of workers and the:

Accepted Answer

The efficiency of each worker is a crucial factor in determining the number of effective workers. Even if there are a large number of workers, if they are not efficient, the productivity level will be low and hence the number of effective workers will be fewer. The amount of capital available to each worker, rate of growth of the number of workers, and saving rate of each worker are not directly related to the number of effective workers.

Question 2

Over the past 50 years in the United States:

Accepted Answer

According to the statement, output per worker hour, real wage, and capital stock per worker hour have all increased about 2 percent per year. This indicates a growth in productivity and investment in capital. However, the real rental price of capital has remained about the same, indicating that the supply of capital has kept pace with the demand for it, resulting in no change in the rental price.

Question 3

In the Solow model with technological progress, by increasing the efficiency of labor at rate g:

Accepted Answer

In the Solow model with technological progress, the real wage grows at the rate of technological progress (g) because it is tied to the efficiency of labor. However, the real rental price of capital remains constant because it is determined by the marginal product of capital, which does not change with technological progress.

Question 4

According to the Solow model, persistently rising living standards can only be explained by:

Accepted Answer

According to the Solow model, technological progress is the main driver of long-term economic growth and persistently rising living standards. Population growth, capital accumulation, and saving rates are important factors, but these alone cannot explain sustained increases in living standards without improvements in technology.

Question 5

In the Solow growth model with population growth and technological change, the break-even level of investment must cover:

Accepted Answer

In the Solow growth model with population growth and technological change, the break-even level of investment must cover depreciating capital, capital for new workers, and capital for new effective workers. This accounts for maintaining the capital stock, expanding it to accommodate a growing workforce, and enhancing it to keep up with technological advancements, ensuring that the economy can sustain its growth trajectory.

Question 6

In the Solow growth model with population growth and technological change, the steady-state growth rate of income per person depends on:

Accepted Answer

In the Solow growth model, the steady-state growth rate of income per person is determined by the rate of technological progress, as it represents improvements in productivity that drive long-term economic growth.

Question 7

The efficiency of labor:

Accepted Answer

Efficiency of labor refers to the quality and productivity of labor, which includes factors like knowledge, health, and skills.

Question 8

In the Solow growth model, the steady-state growth rate of output per effective worker is ______, and the steady-state growth rate of output per actual worker is ______.

Accepted Answer

In the Solow growth model, output per effective worker grows at a rate of zero in the steady state, while output per actual worker grows at the rate of technological progress.

Question 9

The balanced growth property of the Solow growth model with population growth and technological progress predicts which of the following sets of variables will grow at the same rate in the steady state?

Accepted Answer

In the Solow growth model with population growth and technological progress, output per worker, capital per worker, and the real wage all grow at the rate of technological progress in the steady state.

Question 10

The Solow model predicts that two economies will converge if the economies start with the same:

Accepted Answer

The Solow model predicts that two economies will converge if they start with the same steady states, which represent the long-run equilibrium levels of capital, output, and consumption in an economy. If two economies have different initial capital stocks or populations, they may take different paths to reach their steady states, but if they have the same steady state, they will eventually converge to that same level of output and consumption per capita. Production functions are not necessarily the same across economies; they determine the relationship between inputs (such as capital and labor) and output, and can vary due to differences in technology, institutions, or natural resources.

Question 11

International data suggest that economies of countries with different steady states will converge to:

Accepted Answer

The concept of convergence refers to the tendency of economies with different initial conditions or steady states to eventually move towards their own steady state. This is supported by empirical data on economic growth across countries. While the Golden Rule steady state may represent an optimal level of consumption and capital accumulation, it is not necessarily the outcome towards which all economies converge. Additionally, steady states below the Golden Rule level may imply low levels of capital and output per worker, which is not desirable. Therefore, the best answer is B – economies will converge to their own steady state, which may differ across countries depending on their initial conditions and productivity levels.

Question 12

In a steady-state economy with a saving rate s, population growth n, and labor-augmenting technological progress g, the formula for the steady-state ratio of capital per effective worker (k*), in terms of output per effective worker (f(k*)), is (denoting the depreciation rate by $\delta$ ):

Accepted Answer

The steady-state ratio of capital per effective worker (k*) is determined by the equation f(k*) = (F1F1F1S1F1F1F10 + n + g)k*. Rearranging the equation to solve for k*, we get k* = sf(k*)/(F1F1F1S1F1F1F10 + n + g). Therefore, the correct formula is A.

Question 13

In the Solow model with technological change, the Golden Rule level of capital is the steady state that maximizes:

Accepted Answer

The Golden Rule level of capital in the Solow model with technological change maximizes consumption per effective worker, as it balances the rate of saving and investment to ensure the highest possible standard of living in the long run.

Question 14

The efficiency of labor is a term that does not reflect the:

Accepted Answer

The efficiency of labor primarily reflects factors such as the health, education, and skills of the labor force, rather than the amount of capital it cooperates with.

Question 15

Assuming that technological progress increases the efficiency of labor at a constant rate is called:

Accepted Answer

Assuming that technological progress increases the efficiency of labor at a constant rate is known as "labor-augmenting technological progress." This means that technology advancements make workers more productive without changing the amount of labor required. This kind of technological progress is an essential factor in economic growth and is often used in growth models.

Question 16

If the labor force is growing at a 3 percent rate and the efficiency of a unit of labor is growing at a 2 percent rate, then the number of effective workers is growing at a rate of:

Accepted Answer

The rate of growth of effective workers is the sum of the rates of growth of labor force and efficiency of each worker. Therefore, the growth rate of effective workers is 3 percent (labor force growth rate) + 2 percent (efficiency growth rate) = 5 percent.

Question 17

Conditional convergence occurs when economies converge to:

Accepted Answer

Conditional convergence refers to the concept that economies with similar savings rates, population growth rates, and production functions will converge to their own unique steady states, rather than a universal one. This is because these factors, which can vary significantly between economies, determine the specific steady state each economy is heading towards.

Question 18

The rate of labor-augmenting technological progress (g) is the growth rate of:

Accepted Answer

Labor-augmenting technological progress refers to the improvement in the efficiency of labor, which means that the same amount of labor can produce more output. Therefore, the growth rate of g is the growth rate of the efficiency of labor.

Question 19

With population growth at rate n and labor-augmenting technological progress at rate g, the Golden Rule steady state requires that the marginal product of capital (MPK):

Accepted Answer

The Golden Rule steady state requires that the marginal product of capital (MPK) net of depreciation be equal to n + g. This is because the MPK net of depreciation represents the return to capital, and in the Golden Rule steady state, the return to capital must be equal to the rate of population growth plus the rate of technological progress in order to ensure that the economy is growing at the optimal rate.

Question 20

In a steady-state economy with population growth n and labor-augmenting technological progress g, persistent increases in standards of living are possible because the:

Accepted Answer

The answer of In a steady-state economy with population growth...

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

The number of effective workers takes into account the number of workers and the:

Over the past 50 years in the United States:

In the Solow model with technological progress, by increasing the efficiency of labor at rate g:

According to the Solow model, persistently rising living standards can only be explained by:

In the Solow growth model with population growth and technological change, the break-even level of investment must cover:

In the Solow growth model with population growth and technological change, the steady-state growth rate of income per person depends on:

The efficiency of labor:

In the Solow growth model, the steady-state growth rate of output per effective worker is , and the steady-state growth rate of output per actual worker is .

The balanced growth property of the Solow growth model with population growth and technological progress predicts which of the following sets of variables will grow at the same rate in the steady state?

The Solow model predicts that two economies will converge if the economies start with the same:

International data suggest that economies of countries with different steady states will converge to:

In a steady-state economy with a saving rate s, population growth n, and labor-augmenting technological progress g, the formula for the steady-state ratio of capital per effective worker (k) , in terms of output per effective worker (f(k) ) , is (denoting the depreciation rate by $\delta$ ) :

In the Solow model with technological change, the Golden Rule level of capital is the steady state that maximizes:

The efficiency of labor is a term that does not reflect the:

Assuming that technological progress increases the efficiency of labor at a constant rate is called:

If the labor force is growing at a 3 percent rate and the efficiency of a unit of labor is growing at a 2 percent rate, then the number of effective workers is growing at a rate of:

Conditional convergence occurs when economies converge to:

The rate of labor-augmenting technological progress (g) is the growth rate of:

With population growth at rate n and labor-augmenting technological progress at rate g, the Golden Rule steady state requires that the marginal product of capital (MPK) :

In a steady-state economy with population growth n and labor-augmenting technological progress g, persistent increases in standards of living are possible because the:

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

The number of effective workers takes into account the number of workers and the:

Over the past 50 years in the United States:

In the Solow model with technological progress, by increasing the efficiency of labor at rate g:

According to the Solow model, persistently rising living standards can only be explained by:

In the Solow growth model with population growth and technological change, the break-even level of investment must cover:

In the Solow growth model with population growth and technological change, the steady-state growth rate of income per person depends on:

The efficiency of labor:

In the Solow growth model, the steady-state growth rate of output per effective worker is ______, and the steady-state growth rate of output per actual worker is ______.

The balanced growth property of the Solow growth model with population growth and technological progress predicts which of the following sets of variables will grow at the same rate in the steady state?

The Solow model predicts that two economies will converge if the economies start with the same:

International data suggest that economies of countries with different steady states will converge to:

In a steady-state economy with a saving rate s, population growth n, and labor-augmenting technological progress g, the formula for the steady-state ratio of capital per effective worker (k*) , in terms of output per effective worker (f(k*) ) , is (denoting the depreciation rate by δ\deltaδ ) :

In the Solow model with technological change, the Golden Rule level of capital is the steady state that maximizes:

The efficiency of labor is a term that does not reflect the:

Assuming that technological progress increases the efficiency of labor at a constant rate is called:

If the labor force is growing at a 3 percent rate and the efficiency of a unit of labor is growing at a 2 percent rate, then the number of effective workers is growing at a rate of:

Conditional convergence occurs when economies converge to:

The rate of labor-augmenting technological progress (g) is the growth rate of:

With population growth at rate n and labor-augmenting technological progress at rate g, the Golden Rule steady state requires that the marginal product of capital (MPK) :

In a steady-state economy with population growth n and labor-augmenting technological progress g, persistent increases in standards of living are possible because the:

In the Solow growth model, the steady-state growth rate of output per effective worker is , and the steady-state growth rate of output per actual worker is .

In a steady-state economy with a saving rate s, population growth n, and labor-augmenting technological progress g, the formula for the steady-state ratio of capital per effective worker (k) , in terms of output per effective worker (f(k) ) , is (denoting the depreciation rate by $\delta$ ) :