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Midterm Exam 01 (Lessons 01 - 04)

Started: Jul 11 at 11:07am

Quiz Instructions

Question 1 0 pts

I understand the University's policies on academic integrity and which activities are defined as cheating, as described in the Academic Integrity module. I agree to uphold the University's standards for excellence in education and ensure the work completed for this exam is my own, and that violating these standards is grounds for punishment.

I agree

I do not agree

Question 2   1.33 pts

The typical rate of economic growth of 2% for the typical country has been sustained for about five centuries.

true

false

Question 3   1.33 pts

When one is calculating the average annual growth rate for an economy (which we called g), which of the following is not needed?

initial value

final value

depreciation

years between the initial and final values

Question 4   1.33 pts

Say that a country was interested in having the highest income per capita possible in a century and it could choose between one of these two situations: (i) current income of $10,000 and a growth rate of 4% or (ii) current income of $50,000 and a growth rate of 2%. Which should it choose?

situation (i)

situation (ii)

in a century, the difference between situation (i) and (ii) is less than $1,000

Question 5   1.33 pts

Since 1975, the typical annual economic growth rate for the average country is ___________ .

less than 1%

between 1% and 3%

between 3% and 5%

more than 5%

Question 6 1.33 pts

China’s growth since 1985 is typical for an Asian economy.

true

false

Question 7 1.33 pts

If the Gini coefficient increases, what most likely happens to the 10:10 ratio?

falls

stays the same

grows

Question 8 1.33 pts

Conditional cash transfers like Bolsa Familia (Brazil) and Oportunidades (Mexico) fight poverty by

by giving money to the poor

helping future generations with better education and health care

all of the above

Question 9 1.33 pts

Which will be the smallest?

APG

PG

Question 10 1.33 pts

Since the middle of the last century, the Lorenz curve for U.S. has ___.

moved inward

had virtually no change

moved toward the 45-degree line

Question 11 1.33 pts

As you move to the right along the Lorenz curve, the slope is most likely to be__________.

constant

decreasing

increasing

Question 12 1.33 pts

What kind of country would see the largest fall in poverty as it grows?

one with a small Gini coefficient

one with a large Gini coefficient

The U.S. is best described by relatively ___ income inequality and ___ intergenerational mobility.

low, high

low, low

high, high

high, low

Question 14 1.33 pts

Income inequality is ___ in the United States and one possible reason is ___ returns to education.

rising, rising

rising, falling

falling, rising

falling, falling

Question 15 1.33 pts

2In the Solow model, if depreciation grows, equilibrium income will ___ and income can return to its original level if gamma then ___.

increases, increases

increases, decreases

decreases, increases

decreases, decreases

Question 16 1.33 pts

consumption and investment

In the Solow model, what are the uses of output?

consumption

investment

labor

Question 17 1.33 pts

In the Solow model, what would cause the curve describing production to have an increasing slope as you move to the right in the appropriate graph?

delta < 0

delta > 0

gamma < 1

gamma > 1

alpha < 1

alpha > 1

Question 18 1.33 pts

Consider our Solow model graph and all its curves. If alpha increases, __ will shift __.

1 curve, up

1 curve, down

2 curves, up

2 curves, down

3 curves, up

3 curves, down

Question 19 1.33 pts

In the Solow model, if investment equaled depreciation, the economy would be

growing

neither growing nor shrinking

shrinking

Question 20 1.33 pts

In the Solow model, “steady-state” means ___.

the economy is growing at a constant rate

the value of alpha is constant

the value of income is constant

depreciation is unchanging

Question 21 1.33 pts

Rapidly growing populations, like those of some developing countries today, predated the Industrial Revolution.

true

false

Question 22 1.33 pts

Which of the three demographic stages are most European countries currently in?

1

2

3

Question 23 1.33 pts

Which best describes the behavior of the world population growth rate?

it is now at its maximum rate

the maximum rate was reached a few decades ago

the maximum rate was reached at the start of the Industrial Revolution

the maximum rate was reached in prehistoric times

Question 24 1.33 pts

According to the article “China’s Population: Peak Toil” what notable event occurred in China in 2013?

Chinese growth rate accelerated to a rate not seen in years

Chinese growth slowed to a rate not seen in years

the population shrunk for the first time

the number of working age Chinese has started to decline

Question 25 1.33 pts

Which of the following is currently largest in the U.S.?

r

m

n

Question 26 1.33 pts

It appears that China will become rich before its dependency ratio increases due to an aging population.

true

false

Question 27 1.33 pts

Which countries have the highest dependency ratio?

developed countries

undeveloped countries

Question 28 1.33 pts

When calculating rates of change, what is the difference between per capita income and labor productivity?

the growth rate of real per capita GDP

the net migration rate

the rate of change in the labor force participation rate

Question 29 1.33 pts

Which type of country saw (or is seeing) the fastest fall in birth rates and death rates?

developing

developed

Question 30 1.33 pts

Which one of the following is not one of the “Four Tigers?”

Taiwan

Singapore

South Korea

Japan

Question 31 1.33 pts

If a country was to experience the demographic dividend, what would the population pyramid be most likely to look like? Most of the population would be ___.

at the bottom

at the top

Question 32 50 pts

Part 1 In 1950 the U.S. had a population of 150 million and it was growing at 1.3% a year. Assume no net migration. (10 points total)

a. In about how many years will it take for the U.S. population to double? (5 points)

b. In 2010 U.S. population was 308 million. Calculate the average annual growth rate of the population over these 60 years. (5 points)

Part 2 In year 1, a country has a population of 100 people; 50 of whom have an income of $20 and the other 50 have an income of $30. In year 2, the higher income group has changed; instead of 50 people earning $30, 30 now earn the same $30 and 20 earn $40. (15 points total)

c. Plot the Lorenz curves for both years on the same graph. (5 points)

d. What has happened to income inequality? Why? (5 points)

e. Calculate the Gini coefficient for year 1. (5 points)

Part 3 The Netherlands is described by the Solow model with a production function y = k1/3 where y is the output per worker and k is capital per worker. Now, suppose that the fraction of output invested (or saved) is 30%, that the depreciation rate is 30/1%, and that there is no population growth. (20 points total)

f. Calculate the country’s steady state level of output per worker. (4 points)

g. Now, say that k is equal to 30. Is the country at its steady-state level of output per worker, above the steady state or below the steady state? Show how you reached your calculations. (4 points)

h. Graphically illustrate your answer to f. Also, show how the level of capital in g compares to the steady-state value. (4 points)

i. Now, say that population growth rises from 0% to 2%. What would be the resulting value of this country’s steady state level of output per worker? (4 points)

j. If this country wished to return to the original steady-state level of output per worker (i.e. in part f), what could it do? (4 points)

Part 4

k. Consider a family in a developing country whose income rises and how their fertility decisions would be affected by their changed status. Be sure to mention the roles of the income and substitution effects and draw a graph to illustrate. (5 points)

Question 33 10 pts

Please compare how the Solow model views a fall in the population growth rate with the many issues that countries with falling population growth rates face in the real world. Be sure to describe an issue that aging economies face.