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Unformatted text preview: TEST 2 (Practice) Macroeconomic Theory Please answer the following questions. Be BRIEF and only write on the space provided. No extra points will be given if you just &ll the space with words. Work alone and do not use any type of ¡external help¢. You have 80 minutes to work on your test. NAME: 1. (1 point) State the &rst welfare theorem. Suppose we have a competitive equilibrium with allocation f c t ; k t +1 g T t =0 : Then, the allocation is Pareto Optimal. 2. (1 point) Enumerate the Development Facts. & Enormous variation on per capita and per worker income across countries. & Rates of economic growth vary substantially across countries. & Growth rates change over time. & A country£s relative position in the world distribution of per capita income changes over time. & Growth in output and growth in international trade are closely correlated. & Both skill and unskilled labor migrate from poor to rich nations. 3. (1 point) What is the demographic transition? The process from which countries go from a high fertility/high mortality regime to a low fertility/low mortality regime. Since mortality falls &rsts, the demographic transition is associated with a (temporary) sizeable population growth. 4. (1 point) Why is Growth Accounting useful? It helps to identify what are the main factors behind growth given the data. 5. (1 point) What was the ¡productivity slowdown¢? The big reduction in TFP growth that the U.S. economy su¤ered during the 1970s and 1980s. 1 6. (2 points) De&ne a competitive equilibrium for the basic economy that we presented in class....
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This note was uploaded on 05/13/2010 for the course ECON 110D taught by Professor Schmitt-grohe during the Spring '08 term at Duke.
- Spring '08