Macroeconomics Olivier Blanchard 6th Edition Test Bank

<< Management Accounting 6th Canadian Edition Horngren Test Bank Solution Manual for Financial Management for Public Health and Not for Profit Organizations 4th Edition >>
Product Code: 222
Availability: In Stock
Price: $24.99
Qty:     - OR -   Add to Wish List
Add to Compare

Macroeconomics Olivier Blanchard 6th Edition Test Bank

Description

Macroeconomics, 6e (Blanchard/Johnson)
Chapter 10: The Facts of Growth

10.1 Multiple Choice Questions

1) Of the following, the most often used measure of changing living standards is
A) the growth rate of nominal GDP.
B) the growth rate of real GDP.
C) the growth rate of nominal GDP per capita.
D) the growth rate of real GDP per capita.
E) unemployment per capita.
Answer: D
Diff: 1

2) Over the last hundred years,
A) movements in output due to recessions and recoveries dominate the movement caused by long-run growth.
B) output has decreased in as many years as it has increased.
C) U.S. output has approximately doubled.
D) all of the above
E) none of the above
Answer: E
Diff: 1

3) Suppose individuals wish to obtain the most accurate comparison of living standards between the Canada and Saudi Arabia. To do so, one would convert Saudi Arabian output into dollars using
A) the current nominal exchange rate.
B) the current real exchange rate.
C) the prior years real exchange rate.
D) an average of the last five years exchange rates.
E) purchasing power parity methods.
Answer: E
Diff: 1

4) Using current exchange rates, the U.S. standard of living is ranked
A) higher than it would be under the purchasing power parity method.
B) lower than it would be under the purchasing power parity method.
C) number one in the world.
D) among the lowest in the world.
E) none of the above
Answer: B
Diff: 1

5) If output per capita grows by a constant 6% per year, then the standard of living would grow by about ________ over 3 years.
A) 12%
B) 17%
C) 18%
D) 19%
E) 20%
Answer: D
Diff: 1

6) Which of the following is a main conclusion about growth for OECD countries and the four rich countries examined in the chapter?
A) there has been a large increase in the standard of living since 1950.
B) the growth rates have decreased since the mid-1970s.
C) there has been a convergence of output per capita since 1950.
D) all of the above
E) none of the above
Answer: D
Diff: 1

7) Which of the following best characterizes the economic growth for OECD countries since the mid-1970s?
A) growth has come to a complete halt.
B) growth has slowed down.
C) growth has not changed since the 1950s and 1960s.
D) growth has increased slightly.
E) growth has increased dramatically.
Answer: B
Diff: 1

8) Between 1950 and 2004, standards of living in the OECD countries
A) did not change at all.
B) were converging.
C) all increased at the same rate.
D) decreased at the same rate.
E) decreased, but at different rates.
Answer: B
Diff: 1

9) In the OECD countries, there is a negative relationship between output per capita in 1950 and
A) growth since 1950.
B) output per capita in the 1990s.
C) distance from the equator.
D) population.
E) none of the above
Answer: A
Diff: 2
10) Over the last half-century, which of the following countries has had the highest growth rate of output per capita?
A) Japan
B) France
C) United Kingdom
D) United States
Answer: A
Diff: 1

11) When switching from the current exchange rate method to the purchasing power parity method, Indias standard of living in dollars
A) decreases.
B) remains essentially the same.
C) rises, but still remains far below that of the U.S.
D) rises almost to the level of the U.S.
E) leapfrogs over that of the U.S.
Answer: C
Diff: 2

12) Which of the following countries had the highest level of output per capita in 1950?
A) United States
B) France
C) Japan
D) United Kingdom
Answer: A
Diff: 1

13) Which of the following countries had the lowest level of output per capita in 1950?
A) United States
B) France
C) Japan
D) United Kingdom
Answer: C
Diff: 1

14) Which of the following countries experienced the lowest level of output per capita in 2009?
A) United States
B) France
C) Japan
D) United Kingdom
Answer: B
Diff: 1

15) Leapfrogging refers to
A) the typical irregular pattern of growth: rapid in some decades, and almost non-existent in others.
B) the tendency for a countrys output per capita to catch up to, and then exceed, that of another country.
C) one-upsmanship by politicians who use growth statistics to help win elections.
D) the increased likelihood that a country with very high growth will have a recession, during which some other country will have the highest growth rate.
E) the interchangeability of capital and labor in the aggregate production function.
Answer: B
Diff: 1

16) Convergence has been occurring among the OECD countries because
A) the richer countries give away more of their output than the poorer ones.
B) the poorer countries have had higher growth rates than the richer ones.
C) the richer countries have had higher growth rates than the poorer ones.
D) the poorer countries have had positive growth rates, while the richer ones have had negative growth rates.
E) the procedures for measuring output per capita have been changing.
Answer: B
Diff: 1

17) For this question, assume that there are decreasing returns to capital, decreasing returns to labor, and constant returns to scale. Now suppose that both capital and labor decrease by 5%. Given this information, we know that output (Y) will
A) not change.
B) decrease by less than 5%.
C) decrease by 5%.
D) the reduction in Y will be more than 5% but less than 10%
E) none of the above
Answer: C
Diff: 2

18) For this question, assume that there are decreasing returns to capital, decreasing returns to labor, and constant returns to scale. A reduction in the capital stock will cause which of the following?
A) a reduction in output
B) no change in output
C) an increase in output per capita
D) increase the capital-labor ratio
E) none of the above
Answer: A
Diff: 1

19) For this question, assume that the production function exhibits the same characteristics as those presented in the textbook. Based on these characteristics (i.e., assumptions), successive and equal increases in capital per worker will cause which of the following to occur?
A) output per worker will decline.
B) output per worker will not change.
C) output per worker will increase by a constant amount.
D) output per worker will increase by a larger amount.
E) none of the above
Answer: A
Diff: 2

20) Which of the following will cause a reduction in output per worker in the long run run?
A) capital accumulation or technological progress
B) capital accumulation
C) an increase in the number of workers
D) expansionary monetary policy
E) none of the above
Answer: C
Diff: 2

21) For this question, assume that a country experiences a permanent increase in its saving rate. Which of the following will occur as a result of this increase in the saving rate?
A) a permanently faster growth rate of output
B) a permanently higher level of output per capita
C) a permanently higher level of capital per worker
D) all of the above
E) both B and C.
Answer: E
Diff: 2

22) For this question, assume that a country experiences a permanent reduction in its saving rate. Which of the following will occur as a result of this reduction in the saving rate?
A) a permanently slower growth rate of output.
B) no permanent effect on the level of output per capita.
C) a permanently lower level of output per worker.
D) both A and B
E) both B and C
Answer: C
Diff: 2

23) When using a logarithmic scale to plot output per capita over time, an upward-sloping curve that becomes increasingly steep indicates
A) output per capita is not changing.
B) output per capita is growing by a constant amount each year.
C) output per capita is growing by a constant percentage each year.
D) output per capita is growing by an increasing percentage each year.
E) output per capita is not defined.
Answer: D
Diff: 2
24) An upward-sloping straight line on a linear scale will become a (an) ________ on a logarithmic scale.
A) upward sloping straight line
B) upward sloping curve that gets continually steeper.
C) upward sloping curve that gets continually flatter.
D) horizontal line.
E) downward sloping straight line.
Answer: C
Diff: 2

25) Which of the following must occur to sustain economic growth in the long run?
A) technological progress
B) capital accumulation
C) a higher saving rate
D) all of the above
Answer: A
Diff: 2

26) Which of the following countries had the highest rate of growth of output per capita between 1950 and 2009?
A) United States
B) France
C) Japan
D) United Kingdom
Answer: C
Diff: 2

27) By 2009, which of the following countries had the highest level of real output per capita?
A) United States
B) France
C) Japan
D) United Kingdom
Answer: A
Diff: 1

28) Research by Richard Layard indicates that an increase in a countrys level of output per capita will
A) always increase happiness in that country.
B) always decrease happiness in that country.
C) generally have no effect on happiness in that country.
D) increase happiness in that country if output per capita is relatively low.
Answer: D
Diff: 2

29) Research by Richard Layard indicates that happiness
A) increases as output per capita increases.
B) decreases as output per capita increases.
C) does not change as output per capita changes.
D) appears to depend on peoples relative incomes.
Answer: D
Diff: 2
30) Given the broadest interpretation of technology, technology will include which of the following?
A) how well firms are run
B) the organization and sophistication of markets
C) the political environment
D) the list of blueprints defining the types of products and the techniques available to produce them
E) all of the above
Answer: E
Diff: 1

31) Given the narrow interpretation of technology, technology will include which of the following?
A) how well firms are run
B) the organization and sophistication of markets
C) the political environment
D) none of the above
Answer: D
Diff: 1

32) Suppose there are two countries that are identical with the following exception. The saving rate in country A is greater than the saving rate in country B. Given this information, we know that in the long run
A) the growth rate of output per capita will be greater in B than in A.
B) the growth rate of output per capita will be greater in A than in B.
C) the capital-labor ratios (K/N) will be the same in both countries.
D) the growth rate of output per capita will be the same in both countries.
Answer: D
Diff: 2

33) Suppose there are two countries that are identical with the following exception. The saving rate in country A is greater than the saving rate in country B. Given this information, we know that in the long run
A) the capital-labor ratio (K/N) will be greater in B than in A.
B) the capital-labor ratio (K/N) will be greater in A than in B.
C) the capital-labor ratio (K/N) will be the same in the two countries.
D) economic growth will be higher in A than in B.
Answer: B
Diff: 2

34) Suppose there are two countries that are identical with the following exception. The saving rate in country A is greater than the saving rate in country B. Given this information, we know that in the long run
A) output per capita will be greater in B than in A.
B) output per capita will be greater in A than in B.
C) economic growth will be higher in A than in B.
D) more information is needed to answer this question.
Answer: B
Diff: 2
35) Which of the following will NOT cause an increase in aggregate output (Y) in the long run?
A) an increase in N
B) an increase in K
C) an increase in technology
D) a reduction in the saving rate
E) none of the above
Answer: D
Diff: 1

36) Over the past fifty years, convergence has generally occurred for all of the following groups of countries with the exception of
A) the five richest countries.
B) European countries.
C) the four tigers in Asia.
D) OECD countries.
E) none of the above
Answer: E
Diff: 1

37) Assume that constant returns to scale exists and that N and K both increase by 2%. Given this information, we know that
A) output (Y) will increase by 4%.
B) Y will increase by 2%.
C) Y will increase by less than 2%.
D) Y will increase by less than 4% and more than 2%.
Answer: B
Diff: 2

38) Assume that constant returns to scale exists and that N and K both decrease by 3%. Given this information, we know that
A) output (Y) will decrease 6%.
B) Y will decrease by 3%.
C) Y will decrease by less than 3%.
D) the capital-labor ratio (K/N) will decrease.
Answer: B
Diff: 2

39) Constant returns to scale implies that if N and K both increase by 3% that
A) output (Y) will increase by 3%.
B) Y/N will increase by 3%.
C) Y/N will increase by less than 3%.
D) the capital-labor ratio will increase by 3%.
Answer: A
Diff: 2
40) For this question, assume that the saving rate increases. We know that this increase in the saving rate will cause which of the following?
A) a temporary increase in the level of output per capita
B) no permanent change in the level of output per capita
C) a temporary increase in the rate of growth of output per capita
D) a permanently higher rate of growth of output per capita
E) none of the above
Answer: C
Diff: 2

41) Which of the following will cause a reduction in output per worker (Y/N)?
A) a reduction in the capital stock (K)
B) a reduction in the saving rate
C) a reduction in K/N
D) all of the above
Answer: D
Diff: 2

42) Assume that employment increases by 3%. Holding all other factors constant, we know with certainty that which of the following will occur?
A) output will increase by 3%
B) output per capita will increase by 3%
C) output will increase by less than 3%
D) the capital labor ratio will increase
E) none of the above
Answer: C
Diff: 2

43) Suppose the stock of capital increases by 2% and employment increases by 2%. Given this information, we know that
A) output per capita will increase by 6%.
B) output will increase by 4%.
C) output per capita will increase by less than 4% and more than 2%.
D) none of the above
Answer: D
Diff: 3

44) Decreasing returns to capital (K) implies that a 4% increase in K will cause
A) a reduction in output per worker (Y/N).
B) a reduction in K/N.
C) Y to increase by exactly 4%.
D) Y to increase by less than 4%.
E) no change in Y/N.
Answer: D
Diff: 2
45) For this question, assume that the saving rate decreases. We know that this decrease in the saving rate will cause which of the following?
A) a temporary decrease in the level of output per capita
B) no permanent change in the level of output per capita
C) a temporary decrease in the rate of growth of output per capita
D) a permanently lower rate of growth of output per capita
E) none of the above
Answer: C
Diff: 2

46) Which of the following will cause an increase in output per worker (Y/N)?
A) an increase in the capital stock (K)
B) an increase in the saving rate
C) an increase in K/N
D) all of the above
Answer: D
Diff: 2

47) Decreasing returns to capital (N) implies that a 4% increase in N will cause
A) Y to increase by more than 4%.
B) Y to increase by exactly 4%.
C) Y to increase by less than 4%.
D) no change in Y/N.
Answer: C
Diff: 2

48) Assume that employment decreases by 3%. Holding all other factors constant, we know with certainty that which of the following will occur?
A) output will decrease by 3%
B) output per capita will decrease by 3%
C) output will decrease by less than 3%
D) the capital labor ratio will decrease
E) none of the above
Answer: C
Diff: 2

49) If output per capita grows by a constant 5% per year, then the standard of living would grow by about ________ over 3 years.
A) 12%
B) 16%
C) 17%
D) 18%
E) 20%
Answer: B
Diff: 1
50) If output per capita grows by a constant 3% per year, then the standard of living would grow by about ________ over 4 years.
A) 13%
B) 14%
C) 15%
D) 16%
E) 17%
Answer: A
Diff: 1

10.2 Essay Questions

1) Explain why economists do not use exchange rates to compare standards of living across countries. Also, discuss what economists do to avoid these problems.
Answer: Answers should include discussions about the effects of variations in exchange rates and of systematic differences in prices across countries. The use of PPP numbers reduces the problems associated with these two issues.

2) What are the three main conclusions that can be drawn from an analysis of growth rates for developed countries?
Answer: There are three main conclusions. First, standards of living have increased significantly since 1950. Second, growth rates of output per capita decreased starting in the mid 1970s. And third, the levels of output per capita have tended to converge over time.

3) To what extent have the three main facts of growth not held for certain countries? For which countries have they not generally held?
Answer: There are three main conclusions. First, standards of living have increased significantly since 1950. Second, growth rates of output per capita decreased starting in the mid 1970s. And third, the levels of output per capita have tended to converge over time. These three main conclusions do not apply to many African countries. For example, standards of living have actually decreased for some countries.

4) Convergence refers to what phenomenon regarding growth theory?
Answer: Convergence refers to the phenomenon where the levels of output per capita for countries tend to move closer to one another over time. This implies that countries that start with relatively lower levels of output per worker catch up to other countries and, in some cases, actually pass other countries.

5) Discuss and explain what is meant by the state of technology.
Answer: The state of technology can be defined either narrowly or more broadly. In a narrow sense, it allows firms to convert resources into goods and services. A broader interpretation would allow it to include/take into account the organization of firms, the organization of markets, and so on.

6) Explain each of the following: (1) constant returns to scale; (2) decreasing returns to capital; and (3) decreasing returns to labor.
Answer: All three of these things refer to characteristics of the production function. CRS means that if all inputs change by the same proportion, the level of output will change by the same proportion. Decreasing returns to capital and labor indicates that increases in either resource will cause output to increase but at a decreasing rate.
7) Suppose the capital stock increases by 10% and the number of employed workers increases by 5%. Given this information, explain what will happen to output and to output per worker.
Answer: The level of output will obviously increase because the amount of inputs has increased. Given that the capital stock increases by an amount greater than the amount of workers, we know that the capital labor ratio has increased. This implies that output per worker has also increased.

8) First, what are the primary determinants of output per worker? And second, to what extent can each cause a permanent change in economic growth?
Answer: The two primary determinants of growth are capital accumulation and technological progress. Capital changes when there are changes in investment and, therefore, the saving rate. Because the saving rate cannot increase forever, capital accumulation cannot cause permanent changes in economic growth. Technological progress, on the other hand, can result in permanent changes in economic growth.

9) Briefly explain what effect a reduction in the saving rate will have on growth.
Answer: A reduction in the saving rate will reduce investment, capital and output. During the adjustment process, the rate of growth of output will be negative. However, at some point, I, K and Y will no longer fall. So, the reduction in the saving rate will not have a permanent effect on the rate of growth of output.

10) Is it possible for a country to experience a permanent increase in output per worker over time? If so, how can this occur?
Answer: Yes, it is possible for sustained growth to occur. For sustained growth to occur, technological progress must occur. Changes in the saving rate will not cause sustained changes in growth rates.

11) Briefly explain the relationship between output per capita and happiness. Specifically, to what extent are these two variables related?
Answer: Research by Richard Layard indicates that the proportion of very happy people is higher among the rich than among the poor. At the country level, at low levels of output per capita, increases in output per capita do seem to cause increases in happiness. However, this relation is not as strong for those countries with higher levels of output per capita.

12) Briefly explain what effect an increase in the saving rate will have on growth.
Answer: An increase in the saving rate will increase investment, capital and output. During the adjustment process, the rate of growth of output will be positive. However, at some point, I, K and Y will no longer increase. So, the increase in the saving rate will not have a permanent effect on the rate of growth of output.

13) Explain Mathusian trap.
Answer: Thomas Robert Malthus, an English economist, argued that an increase in output would lead to a decrease in mortality, leading to an increase in population until output per person was back to its initial level. The stagnation of output per person is called a Malthusian trap.

14) Graphically show and explain the effects of an improvement in the state of technology.
Answer: An improvement in technology shifts the production function up, leading to an increase in output per worker for a given level of capital per worker.
15) Consider the production function
Y=
a. Compute output when K=81 and N=100.
b. Is this production function characterized by constant returns to scale? Explain.
Answer: a. Y=9*10=90
b. If both K and N double, Y also doubles. Yes, this production function is characterized by constant returns to scale.

16) Consider the production function, Y= , write the production function as a relation between output per worker and capital per worker.

Answer: =

Write a review

Your Name:


Your Review: Note: HTML is not translated!

Rating: Bad           Good

Enter the code in the box below:



 

Once the order is placed, the order will be delivered to your email less than 24 hours, mostly within 4 hours. 

If you have questions, you can contact us here