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# macro95ex6 - Chapter 6 Long-Run Economic Growth T Multiple...

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Chapter 6 Long-Run Economic Growth T Multiple Choice Questions 1. Between 1870 and 1996, among the United States, Germany, Japan, and Australia, _____ grew at the fastest rate and _____ grew at the slowest rate. (a) the United States; Germany (b) Germany; the United States (c) Australia; Japan (d) Japan; Australia Answer: D Level of difficulty: 2 Section: 6.1 2. The elasticity of output with respect to capital (a) is the increase in output resulting from an increase in the capital stock. (b) is the percentage increase in output resulting from a 1% increase in the capital stock. (c) is always greater than one. (d) is the inverse of the elasticity of output with respect to labor. Answer: B Level of difficulty: 1 Section: 6.1 3. Suppose the current level of output is 5000 and the elasticity of output with respect to capital is 0.4. A 10% increase in capital would increase the current level of output to (a) 5020. (b) 5050. (c) 5200. (d) 5500. Answer: C Level of difficulty: 2 Section: 6.1

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86 Abel/Bernanke • Macroeconomics, Fifth Edition 4. Suppose the current level of output is 5000. If the elasticities of output with respect to capital and labor are 0.3 and 0.7, respectively, a 10% increase in capital combined with a 5% increase in labor and a 5% increase in productivity would increase the current level of output to (a) 5015. (b) 5325. (c) 5575. (d) 6000. Answer: C Level of difficulty: 2 Section: 6.1 5. Over the past year, productivity grew 2%, capital grew 1%, and labor grew 1%. If the elasticities of output with respect to capital and labor are 0.2 and 0.8, respectively, how much did output grow? (a) 1% (b) 2% (c) 3% (d) 4% Answer: C Level of difficulty: 2 Section: 6.1 6. Over the past year, productivity grew by 1%, capital grew by 0%, and labor grew by 5%. If the elasticities of output with respect to capital and labor are 0.4 and 0.6, respectively, how much did output grow? (a) 1% (b) 2% (c) 3% (d) 4% Answer: D Level of difficulty: 2 Section: 6.1 7. The growth accounting equation is (a) Y = Aa K K a N N (b) Y = AF ( K, N ) (c) Y / Y = ∆ A / A + a K K / K + a N N / N (d) Y / Y = ∆ A / A a K K / K a N N / N Answer: C Level of difficulty: 1 Section: 6.1
Chapter 6 Long-Run Economic Growth 87 8. If capital and labor each grows by 5% in a year, the elasticities of output with respect to capital and labor sum to one, and productivity grows by 2% in the year, by how much does output grow during the year? (a) 2% (b) 3% (c) 5% (d) 7% Answer: D Level of difficulty: 3 Section: 6.1 9. Total factor productivity growth is that part of economic growth due to (a) capital growth plus labor growth. (b) capital growth less labor growth. (c) capital growth times labor growth. (d) neither capital growth nor labor growth. Answer: D Level of difficulty: 1 Section: 6.1 10. Over the past year, output grew by 4%, capital grew by 2%, and labor grew by 1%. If the elasticities of output with respect to capital and labor are 0.3 and 0.7, respectively, by how much did productivity grow?

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## This note was uploaded on 03/15/2012 for the course ECON 101 taught by Professor Carlitos during the Spring '11 term at Alaska Bible.

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macro95ex6 - Chapter 6 Long-Run Economic Growth T Multiple...

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