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  1. Chapter Twenty Six: Economic Growth

Chapter Twenty Six: Economic Growth

1
Question 1

Economic analysis applied to economic growth is concerned to explain:

a)
b)
c)
d)
e)
Correct.Incorrect. The answer is c) The determinants of the long-run growth of potential GDP.Your answer has been saved.
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2
Question 2

If real GDP in the year 2000 was 100 and the growth rate is 2 per cent per annum what will be the value of real GDP in 2100?

a)
b)
c)
d)
e)
Correct.Incorrect. The answer is e) 739Your answer has been saved.
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3
Question 3

If real GDP in the year 2000 was 100 and the growth rate is 5 per cent per annum what will be the value of real GDP in 2100?

a)
b)
c)
d)
e)
Correct.Incorrect. The answer is e) 14,841Your answer has been saved.
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4
Question 4

Which of the following is not an important determinant of growth in total output?

a)
b)
c)
d)
e)
Correct.Incorrect. The answer is e) Growth in the money supply.Your answer has been saved.
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5
Question 5

An aggregate production function shows:

a)
b)
c)
d)
e)
Correct.Incorrect. The answer is b) The relationship between real GDP and the quantities of the main inputs that are used to produce that output.Your answer has been saved.
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6
Question 6

The distinguishing feature of endogenous growth theory is that:

a)
b)
c)
d)
e)
Correct.Incorrect. The answer is e) It treats technical progress as an endogenous variable.Your answer has been saved.
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7
Question 7

Why can even small increases in economic growth have a significant impact on living standards?

Hint: re-read 'Growth in potential GDP' pp589-90. It is worth taking a considered look at Table 26.1 (p589).Hint

8
Question 8

In what ways does a nation's population gain from economic growth?

Hint: re-read 'Benefits of growth' pp590-91. You should think about who the potential gainers are and how these gains materialize. Hint

9
Question 9

Why do some people argue that economic growth has actually made us 'worse off' than we used to be?

Hint: re-read 'Costs of growth?' pp591-93. You should set out your thoughts in terms of the criteria which might be used to measure the potential costs of growth. To what extent could we measure the costs you have identified? Is it meaningful to say to a person who has been structurally unemployed for five years that 'technological change creates more jobs than it has destroyed'?Hint

10
Question 10

What are the four main determinants of output growth?

Hint: re-read 'Determinants of growth' pp593-94.Hint

11
Question 11

What are the main implications of assuming decreasing returns to a factor and constant returns to scale within the context of the neoclassical growth model?

Hint: re-read 'Neoclassical growth theory' pp594-98. You may find that a useful way of considering this material is in terms of the policy-making implications of the neoclassical growth model. Hint

12
Question 12

How can technological change be incorporated into a neoclassical growth model?

Hint: re-read 'Technological change in the neoclassical growth model' pp596-97.

Include in your answer a distinction between 'embodied technical change' and 'disembodied technical change'.

Hint

13
Question 13

What is the difference between 'exogenous growth' and 'endogenous growth'?

Hint: re-read 'Endogenous growth' pp598-601.Hint

14
Question 14

What assumptions make modern growth theories 'new' when viewed alongside the standard neoclassical model?

Hint: re-read 'Endogenous growth' and Increasing returns theories' pp598-01. Hint

15
Question 15

How do governments play a role in affecting economic growth?

Hint: re-read 'The role of government' p602.Hint

16
Question 16

During the 1960s and 1970s, science fiction television programmes depicting life in the twenty-first century envisaged us wearing silver suits, eating processed food out of tubes, living on other planets and in space stations, driving cars based on magnetic force-fields and using robot technology to undertake mundane day to day tasks. In reality, there is little intrinsic difference between the houses we live in now and then, fashion hasn't changed significantly (and in some cases looks exactly the same!), we still use petrol-driven cars on tarmac roads and famine persists in many areas of the world. Does this mean that in reality, economic growth has been negligible?

Hint: re-read 'Are there limits to growth?' pp603-04 and the two case studies ('A comparison of US and European growth performance' and 'UK productivity growth') outlined on pp605-8. Hint