King: Economics Chapter 25 Instructions Answer the following questions and then press 'Submit' to get your score. Question 1 Which of the following statements is false? a) Even if a country acquired no extra resources, its output could grow. b) Even if a country had no technological progress, its total factor productivity could increase. c) Even if a country's workforce stayed the same, there could be an increase in human capital. d) If a country's GDP per head rose by 3% a year, it would take about 33 years for its output GDP per head to double. Question 2 Suppose GDP was constant over a period of years and yet living standards increased. Which of the following might not be a reason for this? a) There might be an increase in household production. b) There might be an increase in production by the underground economy. c) There might be an increase in exports. d) There might be an increase in leisure. Question 3 Which of the following statements is false? a) Growth is no help in efforts to ease relative poverty. b) Over a period of time when economic welfare increased, total welfare could decrease. c) If a country decides to invest in more capital this year, then living standards may initially fall and yet in time be higher than they would otherwise have been. d) Growth has reduced drudgery. Question 4 In the basic neoclassical growth model, where does equilibrium occur? a) Where investment per worker equals saving per worker. b) Where investment per worker equals depreciation per worker. c) Where investment per worker equals capital per worker. d) Where capital per worker equals output per worker. Question 5 Suppose the proportion of the population in the workforce increases while everything else stays the same. According to the neoclassical growth model, which of the following statements is false? a) Initially, output per worker will fall. b) Eventually, output per head of population will be higher than it started. c) There will be sustained economic growth. d) There will be capital widening. Question 6 According to the neoclassical growth model, which of the following statements is false? a) If the population continually grows, while everything else stays the same, then living standards will be lower than they would be if the population was constant. b) If people save and invest a higher proportion of their incomes, while everything else stays the same, then there will be sustained growth. c) If people save and invest a higher proportion of their incomes, while everything else stays the same, living standards could fall. d) A new technology which makes workers more productive, while everything else stays the same, may not lead to sustained growth. Question 7 In the past 50 years, the world's population has more than doubled. Which of the following has also occurred? 1. Most people have been left on subsistence incomes, as predicted by Matlhus.2. The prices of most natural resources have risen greatly in relation to average wages. a) Both 1 and 2 b) 1 only c) 2 only d) Neither 1 nor 2 Question 8 There are many reasons why a poor country may fail to catch up with a rich neighbour. Which of the following is not one of these reasons? a) The poor country may have more rapid population growth. b) The rich country may have more human capital. c) The poor country may have a higher saving ratio. d) The rich country may be more open to the world economy. Question 9 Which of the following statements is true?1. If output per head is proportional to the number of ideas had in the past, then a constant rate of growth requires ever rising numbers of new ideas each year.2. World population growth is a potential source of new ideas. a) Both 1 and 2 b) 1 only c) 2 only d) Neither 1 nor 2 Question 10 Which of the following statements about y=Ak growth models is false? a) They assume the production function shifts upwards whenever the stock of physical capital increases. b) They suggest that if the level of investment is higher than depreciation, then there could be sustained growth. c) They are called endogenous growth theories. d) They argue that increasing the saving ratio will have only a temporary effect on output per worker.