FREE Master of Economics: Economic Growth Questions and Answers
Imagine that despite rising living standards, GDP remained stable over time. Which of the following is not likely to be the cause of this?
If a nation's gross domestic product (GDP), which measures its output of goods and services, remains constant and a higher portion is exported, then a lesser portion is available to help its own population.
Which of the following claims is untrue in light of the neoclassical growth model?
The economy will end up with more capital per worker and higher living standards if people save and invest a higher percentage of their incomes while everything else remains the same. However, it would require some other factor, particularly sustained technological growth, to secure further sustained increases in living standards.
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.
Regarding claim 1, the majority of individuals enjoy greater levels of living. Once inflation is taken into account, many resource prices in regard to 2 simply decreased. (If you want to learn more about this, look at, for instance, D E Sullivan, J L Sznopek, and L A Wagner's article, 20th century US mineral prices drop in constant dollars, published by the USGS and available online.)
Which of the y=Ak growth model claims below is untrue?
The y=Ak models contend that larger saving ratios will result in sustained higher growth rates, in contrast to the neoclassical growth model.
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
Regarding 1, there would need to be 2% more ideas every year than the year before in order to maintain growth of 2% annually. Regarding point number 2, since ideas are non-rival, there should be a greater diversity of creative perspectives.
Where is equilibrium in the basic neoclassical growth model?
The capital accessible to each worker remains constant when investment per worker equals depreciation per worker.
Many factors can prevent a poor country from overtaking a wealthy one. Which of the following reasons is not one of them?
The argument that "the poor country may have a higher saving ratio" is insufficient to explain why a poor country might fall behind a rich country. A nation with a high saving and investment ratio will have a higher production per worker than a nation with a lower ratio, all else being equal.