Question 1

Endogenous growth theory explains poverty traps as the result of

Accepted Answer

A)   discrimination
B)   wide variations in basic human attitudes, motivation, and risk-taking
C)   more rapid depreciation of human capital among some groups than others
D)   interdependencies which make investments more valuable in wealthy regions
E)   mismanaged government policyF) A) and B)
G) A) and C)

Question 2

Colonialism affected African growth by

Accepted Answer

A)   fractionalizing the continent ethnically and linguistically
B)   extracting rents for repatriation to Europe
C)   neglecting development in regions of high mortality
D)   establishing exploitative political institutions that persist to the present day
E)   all of the aboveF) D) and E)
G) None of the above

Question 3

If the marginal product of capital is constant,

Accepted Answer

A)   output does not increase when more capital is used in production
B)   technological progress cannot shift the production function
C)   investment is always equal to depreciation
D)   the economy does not reach a steady state
E)   the stock of capital never changesF) A) and D)
G) B) and E)

Question 4

Under the conditions of endogenous growth,

Accepted Answer

A)   there is no role for government intervention in taxing or subsidizing investment
B)   constant MPK prevents spillover effects between physical and human capital
C)   subsidies for capital investment can boost long run growth
D)   firms are likely to over-invest in physical capital
E)   investment continues only until a steady state is reachedF) C) and E)
G) B) and E)

Question 5

Ethno-linguistic diversity in Africa is largely the result of

Accepted Answer

A)   immigration from China and India
B)   government policies to promote bilingual education
C)   heavy reliance on imported technology
D)   arbitrary boundaries created by European colonialism
E)   study-abroad programs which educate African students in European schoolsF) All of the above
G) B) and D) D

Question 6

If convergence is occurring between rich and poor countries one would expect

Accepted Answer

A)   Economic growth rates to equalize
B)   Rich countries to grow more quickly than poor countries
C)   Poor countries to grow more slowly than poor countries
D)   Population growth to be faster in poor countries that rich countries
E)   Population growth to be slower in poor countries that rich countriesF) B) and E)
G) B) and C)

Question 7

Which of the following is not a geographical disadvantage of Sub-Saharan Africa

Accepted Answer

A)   High percentage of land in the tropics
B)   High percentage of population in landlocked nations
C)   Long average distance to core market
D)   High exposure to tropical diseases
E)   Excessive population density at or near coastF) A) and B)
G) A) and C)

Question 8

If the marginal product of capital were increasing in all nations

Accepted Answer

A)   nations would experience a rapid convergence to a steady state in which GDP per capita would be the same across countries
B)   poverty traps would be avoided
C)   nations with large capital stocks would in vest more than nations with small capital stocks
D)   technology would spill over rapidly from rich nations into poor nations
E)   the marginal product of labor would also be increasing in all nationsF) All of the above
G) B) and E)

Question 9

One reason to believe that the marginal product of capital may be constant is that

Accepted Answer

A)   capital and labor are substitutes in production
B)   physical capital and human capital may be complementary inputs
C)   firms treat unsold output as inventory investments
D)   beyond the optimal level, the extra output produced by another machine is always zero
E)   technology rarely changesF) A) and B)
G) A) and C) B

Question 10

Which of the following is most frequently found to be a determinant of the steady state?

Accepted Answer

A)   civil liberties
B)   financial sophistication
C)   life expectancy
D)   price inflation
E)   government purchasesF) A) and B)
G) B) and C)

Question 11

Compared with North and South Africa,Sub-Saharan Africa has

Accepted Answer

A)   higher GDP per capita
B)   more fertile soil for agriculture
C)   greater access to ports
D)   greater susceptibility to malaria
E)   none of the aboveF) D) and E)
G) A) and B)

Question 12

If the economy's production function is given by Output = A(physical capital) .3(human capital) .7(hours worked) .7
Then the marginal product of physical capital is constant if

Accepted Answer

A)   hours worked are a declining function of human capital
B)   hours worked are a linear function of A
C)   the ratio of human capital to physical capital is constant
D)   total factor productivity (
A)   is independent of human capital
E)   physical capital is equal to total factor productivityF) C) and E)
G) A) and C)

Question 13

Empirically,in recent decades

Accepted Answer

A)   convergence has taken place between the richest and poorest nations
B)   divergence has occurred between the richest and poorest nations
C)   the richest and poorest nations have, on average, grown at roughly equal rates, neither converging nor diverging
D)   divergence has occurred among the 50 US States
E)   divergence has occurred among developed countriesF) C) and D)
G) None of the above B

Question 14

Which of the following is not associated with ethno-linguistic diversity?

Accepted Answer

A)   rent-seeking behavior
B)   black market transactions
C)   weak financial development
D)   weak infrastructure
E)   the Dutch diseaseF) A) and B)
G) A) and C)

Question 15

Most evidence suggests that aid

Accepted Answer

A)   Has a significant impact on growth in most circumstances
B)   Only has a significant impact on growth when the amounts are moderate
C)   Only has a significant impact on growth when the amounts are large
D)   Does not have a significant impact if, and only if, local policy is good
E)   Does not have a significant impact on growth in most circumstancesF) A) and B)
G) A) and E)

Question 16

The observation that poorer nations grow more rapidly than richer ones if they share the same steady state,and more slowly if they don't,is known as

Accepted Answer

A)   conditional convergence
B)   spillover
C)   learning by doing
D)   the poverty trap
E)   the iron law of convergenceF) A) and B)
G) D) and E)

Question 17

If the economy's production function is given by Output = A(physical capital) .3(human capital) .7(hours worked) .7
And human capital investments are such that human capital = ½ physical capital,then

Accepted Answer

A)   the marginal product of capital is constant
B)   the marginal product of hours worked is increasing
C)   the marginal product of human capital is increasing
D)   the marginal product of labor (human capital multiplied by hours)  is constant
E)   the marginal product of output is fallingF) A) and D)
G) A) and B)

Question 18

One difference between exogenous growth models and endogenous growth models is

Accepted Answer

A)   there is no steady state in an exogenous growth model
B)   endogenous growth models have no role for total factor productivity
C)   exogenous growth models seek to explain only short run business cycles
D)   endogenous growth models seek to explain technological progress
E)   exogenous growth models do not rely on production functionsF) B) and E)
G) A) and D)

Question 19

The next questions refer to the following.
Suppose the economy has the production function Y = .8K, gross investment is 10% of national income, and the rate of depreciation is 5% of the capital stock.
-Output in this economy

Accepted Answer

A)   is constant
B)   grows by 2%
C)   grows by 3%
D)   grows by 5%
E)   grows by 6%F) A) and E)
G) A) and D)

Question 20

Those who argue that geography is not the main determinant of sub-Saharan Africa's poor economic performance note that

Accepted Answer

A)   African countries have always been poor
B)   there were many flourishing African cities in 1500
C)   heavily populated sub-Saharan African countries have outperformed the more sparsely populated nations
D)   African countries were poor even before the onset of the AIDS epidemic development in regions of high mortality
E)   None of the aboveF) A) and B)
G) A) and C)

Exam 6: Endogenous Growth and Convergence

Endogenous growth theory explains poverty traps as the result of

Correct AnswerverifiedShow Answer

Colonialism affected African growth by

Correct AnswerverifiedShow Answer

If the marginal product of capital is constant,

Correct AnswerverifiedShow Answer

Under the conditions of endogenous growth,

Correct AnswerverifiedShow Answer

Ethno-linguistic diversity in Africa is largely the result of

Correct AnswerverifiedD

If convergence is occurring between rich and poor countries one would expect

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Which of the following is not a geographical disadvantage of Sub-Saharan Africa

Correct AnswerverifiedShow Answer

If the marginal product of capital were increasing in all nations

Correct AnswerverifiedShow Answer

One reason to believe that the marginal product of capital may be constant is that

Correct AnswerverifiedB

Which of the following is most frequently found to be a determinant of the steady state?

Correct AnswerverifiedShow Answer

Compared with North and South Africa,Sub-Saharan Africa has

Correct AnswerverifiedShow Answer

If the economy's production function is given by Output = A(physical capital) .3(human capital) .7(hours worked) .7 Then the marginal product of physical capital is constant if

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Empirically,in recent decades

Correct AnswerverifiedB

Which of the following is not associated with ethno-linguistic diversity?

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Most evidence suggests that aid

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The observation that poorer nations grow more rapidly than richer ones if they share the same steady state,and more slowly if they don't,is known as

Correct AnswerverifiedShow Answer

If the economy's production function is given by Output = A(physical capital) .3(human capital) .7(hours worked) .7 And human capital investments are such that human capital = ½ physical capital,then

Correct AnswerverifiedShow Answer

One difference between exogenous growth models and endogenous growth models is

Correct AnswerverifiedShow Answer

The next questions refer to the following. Suppose the economy has the production function Y = .8K, gross investment is 10% of national income, and the rate of depreciation is 5% of the capital stock. -Output in this economy

Correct AnswerverifiedShow Answer

Those who argue that geography is not the main determinant of sub-Saharan Africa's poor economic performance note that

Correct AnswerverifiedShow Answer

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D

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B

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If the economy's production function is given by Output = A(physical capital) ^.3(human capital) ^.7(hours worked) ^.7 Then the marginal product of physical capital is constant if

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B

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If the economy's production function is given by Output = A(physical capital) ^.3(human capital) ^.7(hours worked) ^.7 And human capital investments are such that human capital = ½ physical capital,then

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