Economics 100b; Spring 1996
Part I. Multiple Choice (12 1/2 minutes; 25 points)
1. Assuming no population growth and no increase in the efficiency of labor, the steady-state level of capital per worker is calculated by:
a. dividing the depreciation rate by the savings rate.
b. looking for the intersection of the y=f(k) line with the "dk" depreciation line.
c. dividing the savings rate by the depreciation rate.
d. using the multiplier to determine the level of investment consistent with full employment.
2. The Golden Rule level of capital accumulation is the steady state with:
a. the highest growth rate of output
b. the highest level of output per worker
c. the highest level of depreciation per worker
d. the highest level of consumption per worker
3. The Solow growth model predicts that countries with higher population growth rates will have
a. lower growth rates of output
b. higher growth rates of output per worker
c. the same growth rate of total output, but a lower level of output
d. none of the above
4. In the Solow growth model, persistent increases in standards of living are due to:
a. technological progress
b. faster labor force growth
c. higher levels of net exports
d. a larger initial stock of capital per worker
5. Today, America's capital stock is below the Golden Rule level. We know this because:
a. The return on investment is greater than the sum of the deprecation rates and the growth rates of population and labor efficiency.
b. The U.S. runs a persistent trade deficit.
c. The U.S. has not yet converged to its steady-state growth path.
d. We don't know this; the capital stock is above the Golden Rule level.
6. In the 1950s, the Federal Reserve bought and sold gold on demand at a price of $35 an ounce; the Bank of England bought and sold gold on demand at a price of 14 pounds, 11 shillings, 8 pence an ounce. The dollar-pound sterling exchange rate was thus:
a. impossible to determine from the information given.
b. $5 to the pound sterling.
c. About $2.40 to the pound sterling.
d. About $0.45 to the pound sterling.
7. If national output is $7,000 billion a year, and domestic spending on all goods and services is $7,200 billion a year, then net exports must equal:
b. -$200 billion a year
c. +$200 billion a year
d. it depends on the real interest rate.
8. In a small open economy with a floating exchange rate, fiscal policy
a. has powerful effects on employment, but not on output or the exchange rate
b. has powerful effects on the exchange rate, but not on employment or output
c. has powerful effects on output, but not on employment or the exchange rate
d. has powerful effects on all three macroeconomic variables.
9. Monetary policy has the largest effects on output in a:
a. small open economy with a fixed exchange rate
b. small open economy with a floating exchange rate
c. large open economy with a fixed exchange rate
d. closed economy
10. Imposing high tariffs (and making no other changes in government tax and spending policy) in a floating exchange rate system will:
a. boost net exports because the additional tariff collections will reduce the government deficit and increase total national saving
b. have no effect on net exports, but lower the exchange rate
c. lead to a recession
d. require a tighter monetary policy.
|Professor of Economics J. Bradford DeLong, 601 Evans
University of California at Berkeley
Berkeley, CA 94720-3880
(510) 643-4027 phone (510) 642-6615 fax