1. Robert Solow added ____________ to the conventional production function to account for technological change.

2. Once we account for changes in the labor force____________, is the next biggest source of the growth of GDP in the United States.

3. China has a higher rate of technological progress than India. ____________ (True/False)

4. According to growth accounting studies, which of the following is a possible reason for the slowdown in growth in the 1970s?

a. Reduced rates of capital deepening

b. Changes in the quality or experience of the labor force

c. A slowdown in technological progress or other factors

d. All of the above are possible factors according to growth accounting studies.

5. Technological Progress in Banking. Computers have revolutionized banking for consumers through the growth of ATMs and electronic bill paying capabilities. Why might not all of these improvements for consumers be counted as technological progress?

6. Foreign Investment and Technological Progress.

Many economists believe countries that open themselves to foreign investment of plant and equipment will benefit in terms of increased technological change because local companies will learn from the foreign companies. In the last several decades, China has been more open to foreign investment than India. Explain how this is consistent with the two countries patterns of economic growth.

7. Technological Progress in Health Care. The introduction of electronic health records is currently viewed as an important innovation in the delivery of health care. Explain how this innovation may increase the supply of capital or labor used in health-care delivery and provide additional benefits to the consumer.

8. Information Technology Spillovers and Economic Growth. Why would it matter if the productivity gains associated with information technology spill over into other sectors of the economy besides information technology itself? Give a few examples of changes in information technology improving productivity in other sectors of the economy.

9. Health Insurance, Wages, and Compensation. In recent years, total compensation of employees including benefits has grown, but wages, not including benefits, have not. Explain why this may have occurred, taking into account that many employers provide health insurance to their employees and health-care costs have grown more rapidly than GDP. Is health insurance free to employees?