ECO 302 Week 4 Quiz – Strayer

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Chapter 4

TRUE/FALSE

1. An increase in the depreciation rate affects the steady-state capital per worker the same way as an increase in the population growth rate.

2. If the saving rate increases, then the optimum level of capital per worker falls.

3. An increase in technology causes the optimum level of capital per worker to rise in the long run or steady state.

4. An increase in technology causes the real GDP per worker to increase during the transition to the steady-state.

5. An increase in technology cause the growth in real output per worker to be higher in the long run or steady-state.

6. An increase in the saving rate causes the growth in real output per worker to be lower in the long run or steady-state.

7. The Solow model of growth says that poorer economies should over time converge towards richer ones in terms of real output put worker.

8. In the long run or steady state of the Solow model, the growth rate of capital per worker is higher with a higher saving rate.

9. An increase in the population growth rate in the Solow model causes the growth in output per worker to be higher in the long run or steady-state.

10. An increase in the population growth rate in the Solow model causes output per worker to be lower in the long run or steady-state.

MULTIPLE CHOICE

1. In the revised version of the Solow growth model the optimal level of capital stock per worker depends on:

a. the saving rating. c. population growth rate.

b. the depreciation rate. d. all of the above.

2. In the revised version of the Solow growth model the optimal level of the capital stock per worker depends on:

a. monetary growth. c. the saving rate.

b. government spending. d. all of the above.

3. In the revised version of the Solow growth model the optimal level of the capital stock per worker depends on:

a. monetary growth. c. appreciation in the stock market.

b. the depreciation rate. d. all of the above.

4. In the revised version of the Solow growth model the optimal level of the capital stock per worker depends on:

a. the population growth rate. c. inflation.

b. government spending. d. all of the above.

5. In the Solow growth model as a growing economy transitions to the steady state:

a. the average product of capital falls. c. the average product of labor falls.

b. output per worker is constant. d. the growth rate of capital is equal to zero.

6. In the Solow growth model in the steady state the growth rate of capital per worker, k*, is:

a. rising. c. fluctuating.

b. falling. d. zero.

7. In the Solow growth model, if technology, A, improves, then in the steady state:

a. output per worker grows faster. c. capital per worker grows faster.

b. output per worker grows at the same rate, zero. d. all of the above.

8. In the Solow growth model, if the population growth rate, n, increases, then in the steady state:

a. output per worker grows slower. c. capital per worker grows at the same rate, zero.

b. capital per worker grows slower. d. all of the above.

9. In the Solow growth model, if the depreciation rate, , increases, then in the steady state:

a. output per worker grows at the same rate, zero. c. capital per worker grows faster.

b. output per worker grows faster. d. all of the above.

10. In the Solow growth model, if labor input, L(0), increases, then in the steady state:

a. output per worker grows faster. c. capital per worker grows faster.

b. capital per worker grows at the same rate, zero. d. all of the above.

11. In the Solow growth model in the steady state the growth rate of output per worker, y*, is:

a. rising. c. constant at zero.

b. falling. d. fluctuating.

12. If the saving rate increases in the Solow growth model, then during the transition to the steady state:

a. the growth rate of capital per worker will increase. c. the growth rate of capital per worker is constant.

b. the growth rate of capital per worker will decrease. d. the growth rate of capital per worker is zero.

13. If the saving rate increases in the Solow growth model, then in the steady state the growth rate of capital per worker is:

a. constant. c. zero.

b. unchanged. d. all of the above.

14. If the saving rate increases in the Solow growth model, then in the steady state the growth rate of capital per worker is:

a. higher. c. lower.

b. unchanged. d. rising.

15. If the level of technology increases in the Solow growth model, then in the steady state, the growth rate of capital per worker is:

a. higher. c. lower.

b. unchanged. d. rising.

16. If the saving rate increases in the Solow growth model, then in the steady state:

a. capital per worker and the growth of capital will be higher. c. capital per worker will be higher but the growth rate of capital will be lower.

b. capital per worker will be higher but the growth rate of capital will remain the same at zero. d. capital per worker will be lower but the growth rate of capital will be higher.

17. If the level of technology increases in the Solow growth model, then in the steady state

a. capital per worker and the growth of capital will be higher. c. capital per worker will be higher but the growth rate of capital will be lower.

b. capital per worker will be higher but the growth rate of capital will remain the same at zero. d. capital per worker will be lower but the growth rate of capital will be higher.

18. If the level of technology increases in the Solow growth model, then in the steady state

a. capital per worker will be higher. c. the growth rate of capital will be lower.

b. saving per worker will be higher. d. capital per worker will be the same.

19. If the level of technology increases in the Solow growth model, then in the steady state

a. capital per worker will be higher. c. the growth rate of capital will be lower.

b. output per worker will be higher. d. both (a) and (b).

20. If the saving rate increases in the Solow growth model, then in the steady state

a. capital per worker will be higher. c. the growth rate of capital will be zero.

b. output per worker will be higher. d. all of the above.

21. If the level of technology increases in the Solow growth model, then in the steady state

a. output per worker will be higher. c. the growth rate of capital will be zero.

b. capital per worker will be higher. d. all of the above.

22. In the Solow growth model during the transition an increase in technology:

a. lowers the growth rate of capital per worker. c. raises the growth rate of capital per worker.

b. does not change the growth rate of capital per worker. d. causes the growth rate of capital to fall to zero per worker.

23. In the Solow growth model during the transition an increase in technology:

a. lowers the growth rate of output per worker. c. raises the growth rate of output per worker.

b. does not change the growth rate of output per worker. d. causes the growth rate of output per worker to fall to zero.

24. In the Solow growth model during the transition an increase in technology:

a. lowers the growth rate of capital and output per worker. c. raises the growth rate of capital and output per worker.

b. raises the growth rate of capital per worker and lowers the growth rate of output per worker. d. lowers the growth rate of capital per worker and raises the growth rate of output per worker.

25. In the Solow growth model in the short run, an increase in the labor input L(0):

a. increases the growth rate of real output per worker. c. reduces the growth rate of capital per worker.

b. increases s•(y/k). d. decreases s + n.

26. In the Solow growth model in the short run, an increase in the labor input L(0),

a. decrease the growth rate of real output per worker. c. increase the growth rate of capital per worker.

b. increases s•(y/k). d. decrease s + n.

27. In the Solow growth model in the long run or steady state, an increase in the labor input L(0) will,

a. increase the capital stock. c. not affect real output per worker.

b. lead to a growth of the capital stock per worker of zero. d. all of the above.

28. In the Solow growth model in the long run or steady state, an increase in the labor input L(0) will,

a. decrease the capital stock. c. not change real output per worker.

b. lead to a positive growth of the capital stock per worker. d. all of the above.

Figure 4.1

Determinants

of k/k

29. In Figure 4.1 the distance between s•(y/k) and s + n is the growth of capital per worker:

a. in the transition. c. in the steady state.

b. in the long-run. d. none of the above.

30. In Figure 4.1 if the saving rate increases, then

a. the curve s + n increases. c. the curve s + n decreases.

b. the curve s + n becomes steeper. d. the curve s + n becomes flatter.

31. In Figure 4.1, if the saving rate increase, then:

a. s•(y/k) increases. c. s•(y/k) decreases.

b. s•(y/k) gets steeper. d. s•(y/k) becomes vertical.

32. In Figure 4.1, if the saving rate increase, then:

a. s•(y/k) and s + n increase. c. s•(y/k) and s + n decrease.

b. s•(y/k) increases while s + n decreases. d. s•(y/k) decreases while s + n increase.

33. In Figure 4.1, if the technology improves, then:

a. s•(y/k) increases. c. s•(y/k) decreases.

b. s + n increases. d. s + n decreases.

34. In Figure 4.1, if the initial amount of labor increases, then:

a. s•(y/k) increases. c. s + n increases.

b. K/L moves away from the optimum. d. the growth rate of population increases.

35. In Figure 4.1, if the initial amount of labor increases, then in the steady state:

a. the growth rate of capital per worker increases. c. the growth rate of output per worker is the same.

b. the growth rate of output per worker rises. d. the population growth rate rises.

36. In Figure 4.1, if the initial amount of labor increases, then during the transition to they steady state:

a. the growth rate of capital per worker and output per worker increase. c. the growth rate of capital per worker increases and output per worker decrease.

b. the growth rate of capital per worker and output per worker.decrease. d. the growth rate of capital per worker decreases and output per worker increases.

37. In Figure 4.1, if the population growth rate increases, then:

a. s•(y/k) increases. c. s + n increases.

b. K/L moves away from the optimum. d. the initial amount of labor increases.

38. In Figure 4.1, an increase in productivity:

a. raises the steady state growth rate of capital per worker. c. lowers the steady state growth rate of output per worker

b. does not change steady-state growth rates of output or capital per worker. d. lowers the steady-state level of capital.

39. In Figure 4.1, an increase in the depreciation rate has the same effects as:

a. an increase in the savings rate. c. an increase in the population growth rate.

b. an increase in the initial amount of labor. d. all of the above.

40. In Figure 4.1, an increase in technology:

a. increases s•(y/k) c. increases s + n.

b. decreases s•(y/k) d. decreases s + n.

41. In Figure 4.1, an increase in technology:

a. increases k*. c. decreases k*.

b. does not affect k*. d. makes k* zero.

42. In Figure 4.1, an increase in the population growth rate:

a. increases k*. c. decreases k*.

b. does not affect k*. d. makes k* zero.

43. In Figure 4.1, an increase in the depreciation rate:

a. increases k*. c. decreases k*.

b. does not affect k*. d. makes k* zero.

44. In Figure 4.1, if the technology improves, then:

a. the steady-state capital stock increases. c. the steady-state growth in output per worker increases.

b. the steady-state growth in capital per worker increases. d. the population growth rate increases.

45. Convergence of economies is the tendency according to the Solow growth model for:

a. richer countries to buy up all the capital in poorer countries. c. poorer economies to grow faster in terms of real GDP per capita than richer countries.

b. richer countries to tend decline as pollution damage increases. d. the tendency for richer economies to shrink to the size of poorer economies.

46. Since 1960 the data show a tendency of output per worker to converge:

a. in all countries in the world. c. in OECD countries.

b. countries with different savings rates. d. none of the above.

47. The data show a tendency of output per worker to converge:

a. among US States from 1880 to 2000. c. in OECD countries from 1960 to 2000.

b. countries with similar economies. d. all of the above.

48. Convergence will not happen if economies around the world have:

a. different saving rates. c. different population growth rates.

b. different technologies. d. all of the above.

49. Convergence will not happen if economies around the world have:

a. different saving rates. c. different levels out labor input.

b. different average products of capital in the transition. d. all of the above.

50. Convergence will not happen if economies around the world have:

a. different capital labor ratios in during the transition. c. different levels out labor input.

b. different population growth rates. d. all of the above.

51. Convergence will not happen if economies around the world have:

a. different average products of capital during the transition. c. different levels of technology.

b. different initial levels of labor input. d. all of the above.

52. Convergence will not happen if economies around the world have:

a. different average products of capital during the transition. c. different optimum levels of capital per worker, k*.

b. different initial levels of labor input. d. all of the above.

53. Economies are said to have converged if they:

a. have the same growth rate in the transition. c. have the same saving rate.

b. have the same capital per worker, k*, in the steady state. d. all of the above.

54. When converging economies:

a. have the same growth rate of capital per worker. c. have the same growth rate of output per worker.

b. the same steady state capital per worker, k*. d. all of the above.

55. Convergence will not happen if economies around the world have:

a. different savings rates. c. different optimum levels of capital per worker, k*.

b. different population growth rates. d. all of the above.

56. Convergence will not happen if economies around the world have:

a. different capital per worker growth rates in the transition. c. different initial starting points.

b. different initial levels of labor input, L(0). d. none of the above.

57. If the savings rate increases in the Solow growth model, then during the short run transition to the steady state,

a. the growth rate of capital per worker increases. c. the depreciation rate of capital per worker increases.

b. the growth rate of the population decreases. d. the growth rate of capital per worker to equal zero.

58. A major influenza pandemic which led to many deaths would have what effect on the Solow growth model?

a. It would decrease the level of technology. c. It would decrease the depreciation rate.

b. It would decrease the labor force. d. It would increae the level of technology.

59. Suppose that Canada experiences a large migration of Mexicans to Canada. The effect on the Solow growth model would be to

a. decrease the level of technology. c. decrease the saving rate.

b. increase the labor force. d. increae the level of technology.

60. If the initial level of labor increases, but the population growth rate does not change, then the

a. initial capital per worker decreases, c. initial capital per worker remains zero.

b. initial capital per worker increases. d. initial growth rate of capital per worker decreases.

61. If the initial level of labor increases, but the population growth rate does not change, then the

a. initial growth rate of capital per worker decreases. c. initial capital per worker remains zero.

b. initial capital per worker increases. d. initial growth rate of capital per worker increases.

62. In the long run, an economy with twice as much labor has

a. less than twice as much capital. c. less than twice as much real GDP.

b. twice as much capital per worker. d. twice as much real GDP.

63. In the long run, an economy with twice as much labor has

a. more than twice as much capital and real GDP. c. less than twice as much capital and real GDP.

b. twice as much capital per worker and output per worker. d. twice as much capital and real GDP.

64. If the population growth rate increases, then in the steady state of the Solow model,

a. real capital per worker is higher. c. the gowth rate of capital per worker is higher.

b. real capital per worker is lower. d. the growth rate of capital per worker is lower.

65. If the population growth rate increases, then in the steady state of the Solow model,

a. real GDP per worker is higher. c. the gowth rate of GDP per worker is higher.

b. real GDP per worker is lower. d. the growth rate of GDP per worker is lower.

SHORT ANSWER

1. What are the short and long run effects of an increase in the saving rate in the Solow growth model?

2. What are the long and short run effects of an increase in technology, A, in the Solow growth model?

3. What are the long run and short run effects to an increase in the labor input in the Solow growth model?

4. What are the long and short run effects of an increase in the population growth rate the Solow growth model?

5. Why does the Solow growth model show the economies of poor countries tend to converge over time toward richer ones in terms of per capita and real GDP per worker?

Chapter 5

TRUE/FALSE

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

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

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

4. Ideas are rival goods.

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

6. Conditional convergence is the tendency of economies to coverge when they are similar.

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

8. In the Solow growth model, the growth rate of output per worker is positively related to the optimal level of output per worker.

9. The Solow growth model with exogenous technological growth implies that the steady-state growth rate of real GDP per worker is lower than the rate of technological progress.

10. In the Romer endogenous growth model, the rate of technological progress depends on private returns to R&D investment.

MULTIPLE CHOICE

1. Conditional convergence is the tendency of economies to converge:

a. all the time. c. only when economic conditions are good..

b. when they are similar. d. only when currencies are stable.

2. Absolute convergence is the tendency of economies to converge:

a. all the time. c. only when economic conditions are good.

b. when they are similar. d. only when currencies are stable.

3. 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). c. the optimum output per worker, k*

b. k/k. d. all of the above.

4. 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). c. the optimum output per worker, k*

b. k/k. d. all of the above.

5. 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). c. the optimum output per worker, y*

b. y/y. d. all of the above.

6. 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). c. the optimum output per worker, y*

b. y/y. d. all of the above.

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

a. c.

b. Y = A•F(K,L) d.

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

a. c.

b. Y = A•F(K,L) d.

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

a. the initial level of output. c. the optimum level of output.

b. the initial level of output per worker. d. the optimum level of output per worker.

10. In the key equation for convergence , y* is:

a. the initial level of output. c. the optimum level of output.

b. the initial level of output per worker. d. the optimum level of output per worker.

11. In the key equation for convergence , k* is:

a. the initial level of capital. c. the optimum level of capital.

b. the initial level of capital per worker. d. the optimum level of capital per worker.

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

a. the initial level of capital. c. the optimum level of capital.

b. the initial level of capital per worker. d. the optimum level of capital per worker.

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

a. the saving rate. c. the degree the rule of law is maintained.

b. the fertility rate. d. all of the above.

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

a. the degree that democracy is maintained. c. the average rate of inflation.

b. changes in the terms of trade. d. all of the above.

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

a. the size of government. c. investment in education and health.

b. the extent of international openness. d. all of the above.

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

a. zero c. cyclical.

b. negative. d. positive.

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

a. the production function. c. the Solow growth model.

b. the Ak model of constant average product of capital. d. all of the above.

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

a. constant. c. negative.

b. positive d. cyclical.

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

a. output per worker grows in the long run. c. the Y/K ratio grows.

b. there is no convergence. d. all of the above.

20. 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. c. the Y/K ratio grows.

b. output per worker grows in the long run. d. all of the above.

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

a. c. sA – (s +N)

b. Ak d. none of the above.

22. In the Solow growth model with technological progress,

a. k* is constant. c. k* is cyclical.

b. k* is growing d. k* is declining.

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

a. capital per worker is constant. c. capital per worker is increasing.

b. capital per worker is cyclical. d. capital per worker is declining.

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

a. growing. c. cyclical.

b. shrinking. d. fluctuating.

25. In endogenous growth models, technological progress comes from:

a. outside the system. c. increases in the capital stock.

b. research and development. d. all of the above.

26. An example of a rival capital good is:

a. infrastructure like roads. c. an idea like a new chemical formula for a drug.

b. a machine like a printing press. d. all of the above.

27. An example of a non-rival good is:

a. a output like a pizza. c. an idea like a new chemical formula for a drug.

b. a machine like a printing press. d. all of the above.

28. An example of a non-rival good is:

a. mathematical formulas in calculus. c. an idea like a new chemical formula for a drug.

b. codes for computer software. d. all of the above.

29. An example of a rival capital good is:

a. an employee like an R&D engineer. c. a structure like a factory.

b. a machine like a printing press. d. all of the above.

30. An example of a non-rival good is:

a. an output like a shirt. c. a structure like a factory.

b. code for computer software. d. all of the above.

31. An example of non-rival good is:

a. mathematical formulas in calculus. c. an output like a dress.

b. a machine like a laser printer. d. all of the above.

32. 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. c. anti-trust exemptions.

b. land grants. d. all of the above.

33. 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. c. anti-trust exemptions.

b. copyrights. d. all of the above.

34. 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. c. it is funded by the government.

b. it is encouraged by patents and copyrights. d. all of the above.

35. The rewards to private R&D depend on:

a. the costs of R&D. c. the security of intellectual property rights.

b. the rewards from the results of R&D. d. all of the above.

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

a. the costs of R&D. c. the security of intellectual property rights.

b. the rewards from the results of R&D. d. all of the above.

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

a. the costs of R&D. c. the security of intellectual property rights.

b. growth rate of capital per worker. d. all of the above.

38. If intellectual property rights become better secured, then:

a. the costs of R&D are greater. c. the private returns to R&D are greater.

b. the costs of R&D are smaller. d. the private returns to R&D are smaller.

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

a. greed. c. intellectual property rights.

b. a rival good. d. all of the above.

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

a. patents are not valuable. c. ideas and inventions are non-rival.

b. approval is costly. d. all of the above.

41. Diffusion of technology means:

a. how many industries a technology can be used in. c. how expensive a technology is.

b. describes the imitation and adaptation of technology from country to country. d. how many scientist had to work on a technology.

42. Steady state growth is when:

a. when the average product of capital, y/k, is unchanging as k increases at a constant rate. c. when the rate growth of output per worker is constant at zero.

b. when the rate of growth of capital per worker is constant at zero. d. all of the above.

43. With steady state growth:

a. ( y/y)* = ( k/k)* c. ( y/y)*= g/(1- )

b. y/k is constant. d. all of the above.

44. With steady state growth:

a. ( y/y)* = ( k/k)*. c. y* = 0.

b. k* = 0. d. all of the above.

45. With steady state growth:

a. there is absolute convergence. c. k* growth fluctuates.

b. y/k is constant. d. all of the above.

46. With steady state growth:

a. k* growth fluctuates. c. ( y/y)*= g/(1- )

b. there is absloute convergence. d. all of the above.

47. With steady state growth:

a. the optimal output per worker and capital per worker grow at the same rate. c. the average product of capital is constant.

b. the steady state growth rate of real GDP per worker is greater than the rate of technological progress. d. all of the above.

48. With steady state growth:

a. the optimal output per worker and capital per worker grow at the same rate. c. the average product of capital falls.

b. the steady state growth rate of real GDP per worker is equal to the rate of technological progress. d. all of the above.

49. With steady state growth:

a. the optimal output per worker grows faster than optimal capital per worker. c. the average product of capital is constant.

b. the steady state growth rate of real GDP per worker is less than the rate of technological progress. d. all of the above.

50. With steady state growth:

a. the optimal output per worker grows faster than the optimal capital per worker. c. the average product of capital is falling.

b. the steady state growth rate of real GDP per worker is greater than the rate of technological progress. d. all of the above.

51. A government which promotes free trade across borders will

a. increase efficiency, which increases productivity and the steady-state real GDP per worker. c. increase poverty, which decreases productivity and the steady-state real GDP per worker.

b. decrease efficiency, which decreases productivity and the steady-state real GDP per worker. d. decrease saving, which decreases the steady-state real GDP per worker.

52. A country which has a poorly-performing judicial system will experience

a. an increase in efficiency, which increases productivity and the steady-state real GDP per worker. c. an increase in saving, which increases the steady-state real GDP per worker.

b. a decrease in efficiency, which decreases productivity and the steady-state real GDP per worker. d. a decrease in saving, which decreases the steady-state real GDP per worker.

53. The evidence on conditional convergence

a. indicates that conditional convergence holds for a broad group of countries. c. indicates that absolute convergence is more likely than conditional convergence.

b. fails to show any notable signs of conditional convergence. d. fails to hold constant variables such as saving rates and fertility rates, so is inconclusive.

54. Recent research on the determinants of economic growth suggest which of the following variables helps to explain growth?

a. the extent of official corruption c. the degree of international openness

b. the scope of education and health programs. d. all of the above.

55. The high growth rates of real GDP per person in South Korea and Taiwan from the 1960s to 2000 reflect

a. high steady-state values for capital per worker. c. high initial values for capital per worker.

b. low steady-state values for population growth. d. high initial values for output per worker.

56. Absolute convergence suggests that growth rates of real GDP per person in sub-Saharan Africa from 1960 to 2000 would be

a. high. c. low.

b. moderate. d. negative.

57. Conditional convergence suggests that growth rates of real GDP per person in sub-Saharan Africa from 1960 to 2000 would be

a. high. c. low.

b. moderate. d. negative.

58. The fact that growth rates of GDP per worker in many African countries were the lowest in the world from 1960 to 2000 can be explained by

a. absolute convergence. c. partial convergence.

b. conditional convergence. d. steady-state convergence.

59. The fact that growth rates of GDP per worker in many African countries were the lowest in the world from 1960 to 2000 can be explained by

a. low initial values of capital per worker. c. low steady-state values of capital per worker.

b. low initial values of GDP per worker. d. high initial values of saving.

60. The fact that growth rates of GDP per worker in many African countries were the lowest in the world from 1960 to 2000 can be partly explained by

a. low initial values of capital per worker. c. low rates of population growth.

b. low initial values of GDP per worker. d. weak education and health programs.

61. The fact that growth rates of GDP per worker in many East Asian countries were high from 1960 to 2000 can be partly explained by

a. high initial values of capital per worker. c. relatively little openness to international trade.

b. high initial values of GDP per worker. d. satisfactory programs in education and health.

62. In the Solow growth model with exogenous technological progress, if the share of capital income is 1/2 and technology improves at a rate of 1 percent per year, then the steady-state growth rate of real GDP per person equals

a. 2 percent per year. c. 0.5 percent per year.

b. 1 percent per year. d. zero percent per year.

63. In the Solow growth model with exogenous technological progress, if the share of capital income is 1/3 and technology improves at a rate of 2 percent per year, then the steady-state growth rate of real GDP per person equals

a. zero percent per year. c. 2 percent per year.

b. 1 percent per year. d. 3 percent per year.

64. In the Solow growth model with exogenous technological progress, absolute convergence

a. continues to exist, but conditional convergence does not. c. and conditional convergence continue to exist.

b. does not exist, but conditional convergence continues to exist. d. and conditional convergence no longer exist.

65. The Romer model of endogenous growth suggests that countries that spend more on R&D tend to have

a. lower rates of applications for patents and copyrights. c. higher growth rates of GDP per person.

b. lower growth rates of of capital per person. d. lower growth rates of GDP per person.

SHORT ANSWER

1. What is conditional convergence?

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

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

4. 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?

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