Economic Growth 3rd Edition David N Weil - Solutions

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Suppose that output in a country is produced using only a nonrenewable resource. The rate of extraction of the resource is 1% per year. After 36 years, total output in the economy has doubled. What was the rate of technological progress? After how many years will the stock of the resource be
Governments often impose taxes on the emission of specific pollutants, such as the carbon tax discussed in Section 16.3. What is the relationship between the short-run effect and the long-run effect of such a tax on the quantity of pollution emitted? What is the relationship between the revenue
What is the equity-efficiency trade-off?
People in a particular country that is closed to trade consume only cheese and bread. They always consume one slice of cheese with one slice of bread. It takes three labor-hours to produce a slice of cheese and one labor-hour to produce a slice of bread. The country has a total of 80 labor-hours
A UK citizen buys shares in a company based in Japan. How is the dividend income from the shareholdings counted in UK GNP and GDP?
Describe some ways to evaluate the impact of openness to trade on economic growth.
There are two countries, A and B. Productivity in Country A is three times as high as productivity in Country B. Technology in Country A is five times as high as technology in Country B.How does efficiency in the two countries compare?
What is technology blocking? Why is this an important source of inefficiency in developed countries?
List the reasons for the misallocation of factors among sectors.
What is rent-seeking behavior? How does it lead to inefficiency?
How does the evidence from the former Soviet Union support the view that central planning is inefficient?
Over the period from a.d. 1 to a.d. 2000, the world population is estimated to have increased from 170 million to 6 billion, while the level of income per capita increased by 0.13 percent annually. Assuming that the quantities of human and physical capital per worker did not change, and that the
What is cost disease? What impact does cost disease in the services sector have on the growth of productivity and aggregate output?
Name three potential sources of future technological progress through an increase in the labor employed in R&D.
Clearly explain the two assumptions implicit in the technology function in Equation 9.4. Do you think these assumptions are reasonable?
Consider the one-country model of technology and growth that was presented in Section 8.3. Suppose that L = 1, m = 10, and gA = 0.3. (These numbers are not meant to be realistic but rather are chosen to make the calculations easier. There has certainly never been a country where one third of the
For each of the following goods, indicate whether the good is rival or nonrival and whether it is excludable or nonexcludable.a. flowers from a public parkb. airc. satellite televisiond. an ice cream
What is “capital-biased” technological change?What implication does this have for the international transfer of technology?
Explain the concept of creative destruction and its effect on firms.
Consider the following data, which apply to countries A and B in the years 2000 and 2010.In both countries, the production function(in per-worker terms) is y = Akah1-a, where a = 1/3.Which country had higher productivity growth between 2000 and 2010? Show how you got your answer. (You do not need
Consider the following data on the fictional countries of Sylvania and Freedonia. The production function is y = Akah1-a, where a = 0.5.a. Calculate the level of productivity, A, in each country.b. Calculate the countries’ relative levels of output if all differences in output were the result of
If a country’s physical and human capital both triple over the course of 100 years, and output increases by a factor of nine, by what factor does productivity increase during this time?
Discuss the measurement problems associated with the development and growth accounting techniques.
What is productivity? How does it affect GDP per worker? Explain with reference to the Cobb-Douglas production function.
The highest levels of education among the adult(age 25 and over) population in a country were no schooling, 1%; partial primary, 3.4%;complete primary, 8.8%; incomplete secondary, 22.1%; complete secondary, 43.4%; incomplete higher, 7.6%; and complete higher, 13.7%.Using the data in Table 6.2,
What fraction of wages is the result of human capital for a worker who has eleven years of education?
How does the quality of education vary across countries? What implication does this have for the measurement of human capital?
How does the return to education change with years of education?
In 1980, 61.7% of the population in the United States was of working age. In 2000, 59.0% of the population was of working age. Calculate the effect of this change in demographics on the annual growth rate of GDP per capita.
Suppose that a country has the following female age structure in the year 2005:Age Population(millions)0–20 90 21–40 60 41–60 30 Two-thirds of women die at age 40 and one-third live to age 60.Starting in the year 2005, each woman has exactly one daughter at age 20.What does the age structure
How is the distribution of the world’s population across developed and less-developed countries forecast to change in the next four decades? What impact will this have on the average standard of living in the world?
Explain the concept of replacement fertility.How is the total fertility rate in rich and poor countries forecast to change relative to the replacement rate in the year 2050?
Country X and Country Y have the same survivorship function. They also have the same TFRs. However, Country X has a NRR of 2, whereas in Country Y the NRR is only 1.Explain how this could happen by graphing possible age-specific fertility and survivorship functions in the two countries.
Consider the survivorship function and age-specific fertility functions depicted in the figure below.a. Calculate life expectancy at birth.b. Calculate the TFR.c. Calculate the NRR, assuming that half of children are girls.
Suppose that in a country one-third of all females born die in infancy, one-third die at age 28, and one-third live to age 56.Women bear one child at age 22, one child at age 26, one child at age 30, and one child at age 34.One-half of children are girls.a. Compute the TFR and the NRR.b. Suppose
Suppose that two countries, A and B, have the same rates of investment and depreciation, the same levels of productivity, and the same levels of output per worker. They differ, however, in their rates of population growth. The growth rate of population in Country A is greater than in Country B.
Suppose that there are two countries, X and Y, which differ in both their rates of investment and their population growth rates. In Country X, investment is 25% of GDP and the population grows at 0% per year. In Country Y, investment is 5% of GDP, and the population grows at 5% per year. The two
What are the channels through which the mortality transition has taken place in the last 150 years?
How well has the Malthusian model explained population growth in the last two hundred years?
In a country the production function is y = k1/2. The fraction of output invested, g, is 0.25. The depreciation rate,d, is 0.05.a. What are the steady-state levels of capital per worker, k, and output per worker, y?b. In year 1, the level of capital per worker is
The fraction of output invested in 50%. The depreciation rate is 10%. 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 conclusion.
Explain whether or not each of the following is physical capital:a. Wheatb. A U.S. air force fighter jetc. A shopping mall complexd. Royalties from the sale of music CDs
Describe the concept of “convergence” towards the steady state. What does the theory of convergence predict about differences in average per capita income across countries?
What is the steady state of the Solow model?How does an economy’s capital stock change when it is at the steady state?
What is the evidence on the share of income from capital in total national income? What is the common estimate of the share of capital in national income and why is it used?
The government has a theory that academic performance in school will improve if students are taught in smaller classes. Describe how you would construct a randomized control trial in your school to assess this theory. Be as specific as possible regarding how you would design the trial, select class
For each of the following variables, give your best guess (and an explanation) of whether the variables have a positive, negative, or roughly zero correlation in a cross-section of countries:a. The use of antidepressants and the size of GDPb. The number of television sets and child mortalityc. The
For each of the following scenarios, discuss what statistical problem might make the inference incorrect:a. Cities with high levels of crime also attract a lot of immigrants. This means that many immigrants are involved in criminal activity.b. Students who take extra classes get worse grades than
A study finds that there is a strong correlation between the existence of democracy and the GDP of a country. Does this mean that when countries become richer they become more democratic?Tell a story in which the correlation is the result of reverse causation. Tell a story in which the correlation
Give an example of something that is correlated with life expectancy where it is clear a priori that causation runs from life expectancy to that measure and not in the other direction.
Give an example of a possible ultimate cause of low productivity.
Give an example of a possible proximate cause of low productivity.
Describe the problem of “external validity” with respect to randomized controlled trials. How useful do you think these trials are in explaining the proximate and ultimate causes of growth?
Explain the concepts of “reverse causation” and“omitted variables.” Name some techniques that could overcome these problems.
Suppose there are only two goods produced in the world: computers, which are traded internationally, and ice cream, which is not.The following table shows information on the production and prices of computers and ice cream in two countries:a. Calculate the level of GDP per capita in each country,
In a very poor country, the average wage per worker is found to be one-tenth the average wage of a worker in a very rich country, using market exchange rates.How would this ratio change if PPP exchange rates were used? Explain why
Between 1975 and 2010, South Korea’s GDP per capita grew at an average rate of 5.4% per year whereas GDP per capita in the United States grew at an average rate of 1.8%. In 2010, U.S.GDP per capita was $42,189 and South Korean GDP per capita was $20,922. Assuming that the two countries continue
In 2010 GDP per capita in the United States was $42,189, whereas GDP per capita in El Salvador was $3,068. Suppose that income per capita in the United States has been growing at a constant rate of 1.8% per year. (Figure 1.4 shows that this is roughly true.) Calculate the year in which income per
In 1950 GDP in the United Kingdom (measured in year 2005 pounds) was £317 billion. In 2000 it was £1,108 billion. Calculate the growth rate of real GDP in the United Kingdom over this period.Now suppose that the United Kingdom grows at the same rate for the 50 years following 2000.What will the
Suppose that in a particular country, GDP per capita was $1,000 in 1900 and $4,000 in 1936. Using the rule of 72 (not a calculator), approximate the annual growth rate of GDP per capita.
How fast would a country have to be growing to double its output in twelve years? You should answer this question using the rule of 72, not a calculator.
Governments often impose taxes on the emission of specific pollutants, such as the carbon tax discussed in Section 16.3. What is the relationship between the short-run effect and the long-run effect of such a tax on the quantity of pollution emitted? What is the relationship between the revenue
The World Bank estimates that in 1992, between 300 million and 700 million women and children suffered from severe indoor air pollution produced by cooking fires, with effects on health that were often equivalent to smoking several packs of cigarettes per day. Discuss how the analysis of indoor air
It has just been announced that large deposits of oil have been discovered in Chile. It will take five years for production to begin, but after that time Chile will become the world’s largest oil producer by a large margin.a. How and why does this announcement affect the world supply curve for
Suppose that the price of gasoline has been $1 per gallon for a long period of time. Now consider two possible scenarios:How would the quantity of gasoline consumed in the first year after the price increase differ in these two scenarios? How would the quantity consumed in the fourth year after the
Assume that the world has a 1,000-year supply of some resource at the current rate of use.Suppose that the rate of use grows at 2% per year. How long will the supply last?
Using Table 16.2, answer the following question: How would total energy use in the world compare to current energy use if everyone in the world used the same energy per capita as is currently used by residents of upper-middleincome countries?
The quantity of fish in a lake grows according to the equation:Gt = St * (100 - St)100 , where St is the stock of fish at the beginning of period t and Gt is the amount of fish that grow during period t, both measured in tons.a. Suppose that in a certain year, the stock of fish in the lake is equal
The following table presents data on population, GDP per capita, and total energy consumption in a country in 1965 and 2000. At what annual rate did the energy intensity of output grow over this period?
Why does the environmental Kuznets curve have an upside-down U shape?
Why is the long-run price elasticity of demand for a resource generally higher than the shortrun price elasticity of demand?
What is the theoretical relationship between current and future prices for a natural resource?What can cause this mechanism to break down?
How does the calculation of green GDP take into account the depletion of natural capital?
What is sustainable development? What are some problems with the Brundtland Commission’s definition of the term?
What is the tragedy of the commons? For what types of natural resources is it relevant?
Study the history and geography of each of the following countries. Then write a short description of how geography, climate, and natural resources have influenced each country’s economic development and current economic status. Discuss whether the different theories presented in this chapter are
Give an example of a possible (or at least conceivable) technological advance that would alter the relationship between countries’ natural resource endowments and their levels of income per capita. Do the same for a possible technological advance that would alter the relationship between
How have past changes in technology changed each of the following relationships? In each case, cite specific examples.a. The relationship between a country’s natural resources and its level of income per capitab. The relationship between a country’s geographic characteristics and its level of
How does globalization change each of the following relationships? In each case, cite specific examples.a. The relationship between a country’s natural resources and its level of income per capitab. The relationship between a country’s geographic characteristics and its level of income per
What does Jared Diamond’s theory regarding the role of geography in explaining preindustrial economic growth say about the different fates of Europe and China?
What does the Malthusian model presented in Chapter 4 predict will be the effects of climate-based differences in agricultural productivity on population density and on the standard of living in different geographic regions? Does this prediction match what we see in the data?
What is the resource curse? What are some potential explanations for it?
What is natural capital? In what ways is it similar to physical capital and human capital?In what ways is it different?
What characteristics of tropical climates are particularly hostile to economic growth?
Through what channels might a country’s climate affect the country’s level of income per capita?
How were differences in geography reflected in the political histories of Europe and China? How did these political differences in turn affect economic growth?
How did the availability of useful plant and animal species affect economic development in different regions before the 16th century?Why were Europe and Asia advantaged in this regard?
What evidence do we have that proximity to ocean transport is an important contributor to economic growth?
Why are geography, climate, and natural resources particularly interesting to study as possible determinants of economic growth?How do these characteristics differ from other factors affecting economic growth, such as quality of government, income inequality, and culture?
Do the following informal survey of six of your friends or family members. First explain to them the rules of the ultimatum game described in the box “Determinants of Cooperation.”Then tell them to imagine they are the proposer, that the responder is someone from their own economic and social
Imagine that you are playing the “ultimatum game” described in the box “Determinants of Cooperation” (page 423). The other player(whom you cannot observe) is of your same economic and social group. The sum of money to be divided in the game is $1,000.a. If you were the responder, what
Use Figure 14.7 to show how an exogenous increase in “modernization,” which might result from exposure to foreign culture, will affect economic growth. Assuming that modernization responds only slowly to income, show how the initial effect of the exogenous increase differs from its long-run
Consider Figure 14.7, which shows the relationship between cultural modernization and income per capita. In which case will the“modernization multiplier” be larger: when the M(Y) curve is flat, or when it is steep, although less steep than the Y(M)curve? What is the economic interpretation of
In a certain country, there are three ethnic groups: 50% of the population belongs to Group A, 25% of the population belongs to Group B, and 25% of the population belongs to Group C. What is the country’s index of ethnic fractionalization?
Based on the data in Figure 14.3, but not on what you know of their subsequent history, which country would you expect to have a higher growth rate over the period since 1960, Algeria or Zimbabwe? Explain why.
For each of the following attributes, give an example from a distinct culture that you know well. The culture could be that of a country, region, ethnic group, organization (such as a school or corporation), or a similar group. Be as specific as possible in describing the specific cultural
What are some ways in which government policy affects a country’s culture?
How is social capital related to ethnic fractionalization?
What is social capital, and why is it related to trust?
Why is the problem of observer bias particularly severe when we study the effects of culture on economic growth? What are some potential solutions to the problem?

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