### Macroeconomics Practice Test - 11: Economic Growth

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1. Which of the following will not result in an increase in output per worker?

1. An increase in the capital stock, ceteris paribus

2. The capital stock increases at a faster rate than the labor supply, ceteris paribus

3. The capital stock and labor supply increase at the same rate, ceteris paribus

4. There is a labor-augmenting technological change, ceteris paribus

2. A steady state exists when there is no growth of the labor supply and

1. Saving per worker is greater than depreciation investment per worker

2. Depreciation investment per worker is greater than saving per worker

3. Saving per worker less depreciation investment per worker is zero

4. Depreciation per worker is zero

3. When A = 2, K = 80, L = 20, and the Cobb-Douglas production function is $$Y = {K^{0.5}}{L^{0.5}}$$

1. The capital-labor ratio is 4 and output per worker is $4.00 2. The capital-labor ratio is 0.25 and output per worker is$4.00

3. The capital-labor ratio is 4 and output per worker is $2.00 4. The capital-labor ratio is 0.25 and output per worker is$2.00

4. When A = 3, the saving rate is 0.40, the depreciation rate is 0.10, and there is no labor supply growth

1. The steady state capital-labor ratio is 48 and output per worker is $36.00 2. The steady state capital-labor ratio is 144 and output per worker is$36.00

3. The steady state capital-labor ratio is 16 and output per worker is $12.00 4. The steady state capital-labor ratio is 36 and output per worker is$18.00

5. When an economy is at steady state growth and there is an increase in the saving rate

1. The saving curve shifts upward and there is no change in output curve

2. Saving per worker exceeds depreciation investment per worker and the economy is below the steady state capital-labor ratio

3. The saving curve shifts upward and there is no shift of the depreciation line

4. All of the above

5. None of the above

6. The golden rule steady state exists when

1. Saving per worker is maximized at a steady state capital-labor ratio

2. Depreciation investment per worker at a steady state capital-labor ratio is maximized

3. The distance between the output curve and depreciation line is maximized at a steady state capital-labor ratio

4. The depreciation rate is zero

7. An increase in teh rate of labor supply growth

1. Has no effect upon the steady state capital-labor ratio

2. Increases the steady state capital-labor ratio

3. Decreases the steady state capital-labor ratio

4. Increases output per worker at the steady state

8. A neutral technological change

1. Shifts the depreciation line leftward

2. Increases the effective labor supply

3. Has no effect upon the capital-labor ratio

4. Shifts the saving and output curve upward

9. A labor-augmenting technological change has no effect upon the

1. Depreciation investment line

2. Saving curve

3. Output curve

4. Capital-effective labor ratio

10. When the share of output going to.capital is 0.25, the share going to labor is 0.75, output increases 4%, labor increases 1%, and capital increases 2%, the increase in productivity is

1. 0.75%

2. 1%

3. 1.25%

4. 2.75