QUESTION 1 Growth theory began with _____________, which was introduced in _____
ID: 1191299 • Letter: Q
Question
QUESTION 1
Growth theory began with _____________, which was introduced in _____________.
The Solow growth model; the 1950s
The book An Inquiry into the Nature and Causes of the Wealth of Nations; the late 1800s
The book An Inquiry into the Nature and Causes of the Wealth of Nations; the 1950s
The Solow growth model; the late 1800s
The Solow growth model; 1776
12.5 points
QUESTION 2
Which of the following provides the correct interplay between the real world and economic theory?
real-world observations lead to economic theory, which then leads to policy
real-world observations lead to policy, which then leads to economic theory
policy leads to economic theory, which then leads real-world observations
none of these
12.5 points
QUESTION 3
Consider this version of the equation for a production function: Y = A × F (natural resources, human capital, physical capital). In the Solow model, the letter A in this equation represents:
the convergence rate, an endogenous change.
the convergence rate, an exogenous change.
technology, an endogenous change.
technology, an exogenous change.
12.5 points
QUESTION 4
Determine whether the following statement is consistent with the Solow model, modern growth theory, neither, or both. The U.S. government is hoping to increase GDP growth by building a dam on the Mississippi River. Funding construction for the dam is dependent upon efficient taxes and the rule of law.
Solow model
modern growth theory
neither
both
12.5 points
QUESTION 5
Consider the Solow growth model. When the economy has reached the point of ____________ it is said to have achieved _______________.
depreciation; convergence
no new net investment; convergence
no new net investment; a steady state
depreciation; economic growth
depreciation; a steady state
no new net investment; economic growth
12.5 points
QUESTION 6
Some economies grow faster for reasons particular to those economies.
This statement refers to an economy’s:
technological advances and exogenous growth.
technological innovation and endogenous growth.
capital accumulation and exogenous growth.
exogenous and endogenous growth.
12.5 points
QUESTION 7
Which of the following provide the right incentives for economic growth?
private property rights
corruption
efficient taxes
political instability
high and variable inflation
competitive markets
12.5 points
QUESTION 8
If farmers adhered to the Solow growth model, which items would they view as most important to economic growth?
tractors
grain storage facilities
irrigation equipment
their time and knowledge
The Solow growth model; the 1950s
The book An Inquiry into the Nature and Causes of the Wealth of Nations; the late 1800s
The book An Inquiry into the Nature and Causes of the Wealth of Nations; the 1950s
The Solow growth model; the late 1800s
The Solow growth model; 1776
Explanation / Answer
1) The Solow growth model; the 1950s
2) real-world observations lead to economic theory, which then leads to policy.
3) technology, an exogenous change.
4) both
5) no new net investment; a steady state
6) technological innovation and endogenous growth.
7) private property rights.
8) their time and knowledge
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