ECON 214 Exam #3 Questions with 100% Correct Answers
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Econ528
Institution
Econ528
ECON 214 Exam #3 Questions with 100%
Correct Answers
What are the 3 key components for economic growth? - 1. resources
2. technology
3. institutions
True/False: GDP is a function of land, labor, and capital inputs. - True
True/False: More physical capital available means more production. -
T...
ECON 214 Exam #3 Questions with 100% Correct Answers What are the 3 key components for economic growth? - ✔✔1. resources 2. technology 3. institutions True/False: GDP is a function of land, labor, and capital inputs. - ✔✔True True/False: More physical capital available means more production. - ✔✔True Capital stock in wealthy nations is ( lower/higher) than capital in developing nations. - ✔✔Higher True/False: Investment is usually increasing during periods of expansion. - ✔✔True What is the primary source of economic growth? (Solow model) - ✔✔physical capital True/False: Increasing either physical capital, human capital, or natural resources will increase physical capital. - ✔✔True; increasing any component will increase the whole thing According to the idea of diminishing marginal product, where will capital have the highest marginal produ ctivity? A. in countries with a large amount of labor B. in countries with a small amount of labor C. in countries with a large amount of capital D. in countries with a small amount of capital - ✔✔D. in countries with a small amount of capital What is the fall in value of a resource over time? - ✔✔Depreciation What is net investment? - ✔✔investment - depreciation To increase capital stock, net investment must be..? - ✔✔>0 True/False: In a steady state, there is no net investment. - ✔✔True Over t ime, GDP per capita will equalize. This is the concept of _______. - ✔✔Convergence Countries with lower GDP/capita rates should have (higher/lower) growth rates. - ✔✔higher What is the key determinant for the MODERN economic growth model? - ✔✔technology True/False: Historical data supports the Solow model of economic growth and convergence. - ✔✔False, shows widening gap The original Solow model focused on what as the main source of economic growth? A. labor B. education C. capital D. effective government - ✔✔C. capital Knowledge that is available for use in production is ____? - ✔✔technology True/False: change in technology means that economic growth can continue but there zero -growth long run equilibrium is still unavoidable. - ✔✔False, zero -growth long run equilibrium is avoidable In the second Solow model, how were technology advances modeled? A. Technology depended on institutions in the country. B. Technology was fixed over time. C. Technology shocks were considered random and exogenous. D. Technology gr ew at a steady rate for most countries. - ✔✔C. Technology shocks were considered random and exogenous. True/False: More education shifts the production function downward. - ✔✔False; shifts upward
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