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ECON 100C
Midterm I: Multiple Choice
Version: A
Instructions: Identify the choice that best completes the statement or answers the question.
1. Which of the following production functions do not exhibit constant returns to scale?
A. F (K, L) = AKα L1 -α B. F (K, L) = AK + BL C. F (K, L) =
D. F (K, L) = K(1 - e-(L/K)) E. None of the above
2. In 2014,the per capita GDP of the five richest countries was 70 times higher than that of the five poorest,i.e. = 70. If y = Ak 1/3 and ( k-o(ic)o(h)r )1/3 = 5, then the ratio of TFPs across countries, -o(ic)o(h)r , to explain income differences is .A. 1 B. 5 C. 14 D. 48 E. 77
3. In the Production model, an increase in the capital stock, K- , the wage and employment.
A. Raises; Reduces
B. Does not affect; Raises
C. Raises; Raises
D. Reduces; Reduces
E. Raises; Does not affect
4. Per capita GDP in the U.S. has been growing at an annual rate of % over the last 100 years.
A. 0 B. 2 C. 5 D. 8
5. In the Solow growth model, defining s- as the savings rate, Yt as output, and Ct as consumption, invest- ment, It , is given by:
A. It = (1 - s-) B. It = s-Yt
C. It = (1 - s-)Ct D. It = s-Yt - Ct E. It = (1 - s-)Yt
6. Consider the Solow growth model where the production function is Cobb-Douglas with A- as the total factor productivity and α as the capital share. The steady-state capital stock per worker is:
A. (s-A/d) 1 - α
- - 1
B. (s-A/d) 1+α
- - 1
C. (s-A/d) 1 - α D. (s-A-/d-)1 -α E. (s-A-/d-)α
7. In the textbook Solow growth model, an increase in the savings rate the steady-state capital stock per worker, steady-state output per worker, and steady-state consumption per worker.
A. Reduces; Reduces; Reduces B. Raises; Raises; Raises
C. Raises; Reduces; Reduces D. Reduces; Raises; Raises
E. Raises; Raises; Can raise or lower
8. The golden rule capital stock is the steady-state capital stock where .
A. f, (k) = d-
B. s-f, (k) = d-k
C. s-f, (k) = d
D. f, (k) = 1
E. s-f (k) = dk
9. Consider an economy with the following aggregate production function F (K, L) = AKL, where A = A-g- and g- is per-capita government purchases. An increase in g- the of per capita GDP.
A. Raises; Steady-state level
B. Raises; Growth rate
C. Decreases; Steady-state level
D. Does not affect; The level or growth rate
10. According to the Romer model, objects are and ideas are .
A. Nonrivalrous; Nonrivalrous
B. Rivalrous; Nonrivalrous C. Rivalrous; Rivalrous
D. Nonrivalrous; Rivalrous