Free Master of Economics: Economic Growth Questions and Answers

Question 1

Imagine that despite rising living standards, GDP remained stable over time. Which of the following is not likely to be the cause of this?

Accepted Answer

There might be an increase in exports.

Answer

There might be an increase in leisure

Answer

There might be an increase in household production.

Answer

There might be an increase in production by the underground economy.

Question 2

Where is equilibrium in the basic neoclassical growth model?

Accepted Answer

Where investment per worker equals depreciation per worker.

Answer

Where capital per worker equals output per worker.

Answer

Where investment per worker equals saving per worker.

Answer

Where investment per worker equals capital per worker.

Question 3

Which of the following claims is untrue in light of the neoclassical growth model?

Accepted Answer

If people save and invest a higher proportion of their incomes, while everything else stays the same, then there will be sustained growth.

Answer

If people save and invest a higher proportion of their incomes, while everything else stays the same, living standards could fall.

Answer

A new technology which makes workers more productive, while everything else stays the same, may not lead to sustained growth

Answer

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.

Question 4

The population of the planet has more than doubled in the last 50 years. Which of the subsequent has also happened?

1. Most people have been left on subsistence incomes, as predicted by Malthus.
2. The prices of most natural resources have risen greatly in relation to average wages.

Accepted Answer

Neither 1 nor 2

Answer

1 only

Answer

2 only

Answer

Both 1 and 2

Question 5

Many factors can prevent a poor country from overtaking a wealthy one. Which of the following reasons is not one of them?

Accepted Answer

The poor country may have a higher saving ratio.

Answer

The rich country may have more human capital.

Answer

The rich country may be more open to the world economy.

Answer

The poor country may have more rapid population growth.

Question 6

Which of the ensuing assertions is accurate?

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

Accepted Answer

1 only

Answer

2 only

Answer

Both 1 and 2

Answer

Neither 1 nor 2

Question 7

Which of the y=Ak growth model claims below is untrue?

Accepted Answer

They argue that increasing the saving ratio will have only a temporary effect on output per worker.

Answer

They are called endogenous growth theories.

Answer

They assume the production function shifts upwards whenever the stock of physical capital increases.

Answer

They suggest that if the level of investment is higher than depreciation, then there could be sustained growth.