practice

Országok listájaHungaryBudapesti Corvinus EgyetemGazdálkodástudományi KarNemzetközi gazdálkodás (angol nyelven)Macroeconomicspractice

Practice problems Name___________________________________

MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question. 1) Which of the following represents the best indicator of improving living standards? A) the growth rate of real GDP per capita B) the growth rate of real GDP C) the growth rate of nominal GDP per capita D) the rate of inflation E) the growth rate of nominal GDP 2) Suppose individuals wish to obtain the most accurate comparison of living standards between the Canada and Saudi Arabia. To do so, one would convert Saudi Arabian output into dollars using: A) the prior year's real exchange rate. B) an average of the last five years' exchange rates. C) the current real exchange rate. D) purchasing power parity methods. E) the current nominal exchange rate. 3) If output per capita grows by a constant 6% per year, then the standard of living would grow by about ________ over 3 years. A) 12% B) 17% C) 18% D) 19% E) 20% 4) 3) 2) 1)

4) In the OECD countries, there is a negative relationship between output per capita in 1950 and: A) distance from the equator. B) output per capita in the 1990s. C) population. D) growth since 1950. E) none of the above 5) Which of the following must occur to sustain economic growth in the long run? A) capital accumulation C) a higher saving rate B) technological progress D) all of the above

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6) For this question, assume that the stock of capital (K) increases by 6%. Holding all other factors constant, we know with certainty that which of the following will occur? A) Output per capita will increase by 6%. B) Output will increase by 6%. C) The capital labor ratio will decrease. D) Output will increase by less than 6%. E) none of the above 7) Which of the following will cause a reduction in output per worker in the long run? A) a reduction in the saving rate C) an increase in the depreciation rate B) a reduction in the stock of human capital D) all of the above

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8) For this question assume that technological progress does not occur. Which of the following variables will not change when the economy reaches steady state equilibrium? A) output per worker B) capital per worker C) investment per worker D) all of the above E) only A and B 9) Suppose, due to the effects of a military conflict that has ended, that a country experiences a large reduction in its capital stock. Assume no other effects of this event on the economy. Which of the following will tend to occur as the economy adjusts to this situation? A) zero growth for some time, followed by a gradually increasing growth rate B) positive growth, followed by negative growth, and then zero growth C) a relatively low growth rate for some time D) a relative high growth rate for some time E) none of the above 10) Suppose the saving rate is initially less than the golden rule saving rate. We know with certainty that a reduction in the saving rate will cause: A) a reduction in output per worker. B) a reduction in the capital labor ratio. C) a reduction in consumption per worker. D) all of the above E) none of the above

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11) Suppose the economy is initially in the steady state. A reduction in the depreciation rate ( ) will cause: A) a reduction in C/N. B) an increase in the growth rate in the long run. C) an increase in K/N. D) all of the above 12) Assume that an economy experiences both positive population growth and technological progress. In this economy, which of the following is constant when balanced growth is achieved? A) K B) Y/NA C) K/N D) NA E) none of the above 13) Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that output (Y) is: A) growing at a rate of gN. B) growing at a rate of gA + gN. C) constant. D) growing at a rate of gA - gN. E) growing at a rate of gA. 14) Which of the following represents the fertility of research? A) the protection given to new products by the law B) how R&D spending translates into new ideas C) the extent to which firms benefit from the results of their own R&D spending D) the rate of technological progress E) both B and C 15) Convergence of output per capita across countries has come from: A) higher technological progress from the countries that started behind. B) a convergence of saving rates. C) a convergence of the accumulation of capital. D) all of the above

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ESSAY. Write your answer in the space provided or on a separate sheet of paper. 16) Briefly explain what effect a reduction in the saving rate will have on growth. 17) During the latter half of the 1990s, the U.S. saving rate decreased. Will this reduction in the saving rate have a permanent effect on the rate of growth of output per worker? Explain. 18) Explain what human capital is and discuss how changes in human capital can affect output per worker. 19) Explain what factors determine the slope of the required investment line. 20) Explain what is meant by the fertility and appropriability of the research process.

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