SOLVED

1) In the Romer model. as more labor is devoted to research and development________. A) there is an immediate decrease in output per capita. B) there is an immediate increase in output per capita. C) output per capita is unaffected, but the savings rate begins to rise. D) output per capita is unaffected, but the savings rate begins to fall. 2) In the Romer model, as more labor is devoted to research and development there is________. A) an immediate increase in output per capita and a permanent increase in output per capita. B) an immediate decrease in output per capita and a permanent increase in output per capita. C) an immediate increase in output per capita and a permanent decrease in output per capita. D) an immediate decrease in output per capita and a permanent decrease in output per capita. 3) The Romer model suggests that there is a trade-off between ________. A) the use of resources in research and development and the productiveness of R&D B) the rate of saving and the long-run growth of output C) per capita output in the short-run and long-run D) the size of the total population and the saving rate 4) Spending on education is likely to raise output per person by ________. A) increasing the productiveness of R&D B) by increasing the population C) increasing the fraction of the population engaged in productive activities D) increasing the saving rate 5) Endogenous growth theory supports the conclusion that________. A) government spending cannot influence the level of research and development. B) increased government spending on research and development is counterproductive. C) per capita income growth is a function of real factors, such as the supply of money. D) increased government spending on research and development is useful. 6) One difference between a policy of direct spending by the government on research and development and an alternative policy of tax incentives to encourage private spending on R&D is ________. A) the former improves the productivity of R&D, while the latter raises its level B) the former requires a decrease in national saving, while the latter causes an increase C) the former raises the level of R&D spending, while the latter also improves its productivity D) the former requires an increase in national saving, while the latter causes a decrease 7) According to the Romer model, tax incentives to support research and development will lead to________. A) higher tax rates in the future. B) an increase in the general level of prices. C) a decrease in the general level of prices. D) increased per capita income. Assume that the growth rate of the capital stock in each period is determined by the level of output in the previous period. Â 8) An economy of 80 million people has ten percent of them engaged in research and development, where their productivity is 0.0035. The economy is on a balanced growth path, when suddenly 2.88 million people move from goods production into R&D, raising the fraction there to 13.6 percent. In the one period that begins with this labor reallocation, the growth rate of output is ________. [Refer to the instruction above.] A) 2.8% B) 0.0% C) 3.8% D) 2.2% 9) An economy of 82 million people has twenty percent of them engaged in research and development, where their productivity is 0.003. The economy is on a balanced growth path, when suddenly the productiveness of R&D rises to 0.004. For the one period that begins with this productivity increase, the growth rate of output is ________. [Refer to the instruction above.] A) 8.7% B) 9.4% C) 6.6% D) 7% 10) An economy of 25 million people has twenty percent of them engaged in research and development, where their productivity is 0.0056. The economy is on a balanced growth path, when suddenly a wave of immigration raises the population to 27 million. Assume that the new workers are immediately “on the job,” and that the fraction engaged in R&D remains twenty percent. For the one period that begins with this population increase, the growth rate of output per person is ________. [Refer to the instruction above.] A) 4.3% B) 1.8% C) 3% D) 8%