1. Suppose that in a particular country, GDP per capita was $ 10,000 in 1960 and $ 40,000 in 2008. Using the rule of 72 (not a calculator), approximate the annual growth rate of GDP per capita.
A. 2% B. 3% C. 4% D. 6%
2. Suppose that a region consists of two countries with the same number of people in each of them and in each income group. The following table shows data on their income and nationality. Based on this table, which is the more important source of world inequality: between- country inequality or within- country inequality?
| Population group |
Country |
Income per person |
| A |
E |
200 |
| B |
F |
700 |
| C |
E |
300 |
| D |
F |
800 |
A. Between- country inequality B. Within- country inequality
3. Country A and Country B have the same exact fundamentals, but Country A is twice as rich as Country B. Which country would you expect to have higher growth in the short run?
A. Country A B. Country B C. Same rates
4. Do the following variables have a positive, negative, or roughly zero correlation in a cross- section of countries: GDP per capita and the number of books published (hard copy + electronically) per capita?
A. Zero B. Negative C. Positive
A country is described by the Solow model with a production function of y = k1/2, with k being equal to 625. The fraction of output invested is 50%. The depreciation rate is 5%.
5. What is the actual level of output per worker?
A. 25 B. 20 C. 15 D. 10
6. What is the steady - state level of output per worker?
A. 25 B. 20 C. 15 D. 10
7. What can be expected with regards to the actual level of output per worker?
A. Decrease B. Increase C. Remains the same
Economies of the Countries X and Y satisfy the Solow model with α = 1/3.
In Country X the rate of investment is 7%, and in Country Y it is 28%. The two countries have the same levels of productivity, A, and the same rate of depreciation, δ.
8. What is the ratio of steady- state output per worker in Country X to that in Country Y?
A. 0.10 B. 0.25 C. 0.50 D. 1.0
Use the graphical depiction of the Malthusian model to decide what happens if a natural disaster killed half people and destroyed half the land.
9. Short-time equilibrium per- capita income will
A. Increase B. Decrease C. Not change
10. Long-time equilibrium per- capita income will
A. Increase B. Decrease C. Not change
Two countries, X and Y, satisfy the Solow model with α = 1/3 and productivity A=1. In Country X, investment is 54% of GDP and the population grows at 1% per year. In Country Y, investment is 8% of GDP, and the population grows at 3% per year. In both countries, the rate of depreciation, δ, is 5%.
11. Use the Solow model to calculate the ratio of the steady- state levels of income per capita.
A. 1.50 B. 2.20 C. 2.80 D. 3.00
B. In a country 1/3 of all females born die in infancy, 1/3 die at age 23, and 1/3 live to age 65. Women bear one child at age 17, one child at age 21, one child at age 25, and one child at age 28. One- half of children are girls.
12. The net rate of reproduction is
A. 4 B. 3 C. 2 D. 1
13. The total fertility rate is
A. 4 B. 3 C. 2 D. 1
The returns to education are 13.4% per year for the first four years of schooling (grades 1- 4), 10.1% per year for the next four years (grades 5 - 8), and 6.8% per year for education beyond eight years.
14. What fraction of wages is due to human capital for a worker who has 14 years of education?
A. 0.522 B. 0.684 C. 0.723 D. 0.821
15. What is the ratio of the output per worker (assumed proportional to their wages) of a Country X that has 10 years of schooling to a Country Y that has 7 years of schooling?
A. 1.87 B. 1.56 C. 1.12 D. 1.26