#1
Which of the following is a key assumption of the Solow Growth Model?
Diminishing marginal returns
ExplanationOutput per capita decreases as capital per capita increases.
#2
In the Harrod-Domar model, what does the capital-output ratio represent?
Capital intensity of production
ExplanationAmount of capital required to produce one unit of output.
#3
According to the neoclassical growth theory, what is the primary driver of economic growth in the long run?
Technological progress
ExplanationImprovements in technology increase productivity and output.
#4
Which factor is considered a key limitation of the Lewis Two-Sector Model in explaining economic development?
Inability to account for technological progress
ExplanationDoes not address advancements that drive economic change.
#5
According to the Solow Growth Model, what is the impact of an increase in the savings rate on the steady-state level of output per capita?
It reaches a new, higher level
ExplanationHigher savings lead to increased investment and output over time.
#6
Which of the following is a key assumption in the Lewis Two-Sector Model?
Surplus labor in the agricultural sector
ExplanationRural sector supplies labor to urban sector without diminishing returns.
#7
Which growth model focuses on the role of structural transformation and the shift of resources from traditional to modern sectors?
Lewis Two-Sector Model
ExplanationTransition from agrarian to industrial economies.
#8
Which economic growth model emphasizes the role of human capital and technological progress?
Endogenous Growth Model
ExplanationDevelopment driven by internal factors like innovation and education.
#9
What is the Cobb-Douglas production function commonly used to represent in economic growth models?
Constant returns to scale
ExplanationOutput increases proportionally with inputs, maintaining efficiency.
#10
Which economist is associated with the concept of 'creative destruction' in the context of economic growth?
Joseph Schumpeter
ExplanationInnovative forces replacing outdated technologies and processes.
#11
What does the term 'convergence' refer to in the context of economic growth theories?
The tendency of economies to grow at similar rates over time
ExplanationEconomies with different initial conditions eventually reach similar levels of development.
#12
Which model suggests that economic growth is driven by the accumulation of knowledge and technological innovation?
Endogenous Growth Model
ExplanationDevelopment spurred by internal factors, not just external forces.
#13
In the context of economic growth, what is the significance of the 'Golden Rule' savings rate in the Solow Growth Model?
It minimizes the steady-state capital stock
ExplanationOptimal savings rate for sustained growth without excessive capital accumulation.
#14
Which of the following is a characteristic of the Romer model of endogenous growth?
Endogenous technological progress
ExplanationInnovation arises from within the economy, not external factors.