In the Solow growth model investment equals

Question 1 options:

	saving.
	output.
	consumption.
	the marginal product of capital.

Question 2 (1 point)

In the Solow growth model, it is assumed that a(n) ----------fraction of capital wears out as amount of capital increases.

Question 2 options:

	smaller
	larger
	increasing
	constant

Question 3 (1 point)

According to the two-country partial equilibrium model of trade, the imposition of a tariff on imports by the importing country, all other things equal

Question 3 options:

	may or may not raise net welfare in the importing country.
	definitely increases net welfare in the exporting country.
	definitely increases net welfare in the importing country.
	may or may not reduce net welfare in the world as a whole.

Question 4 (1 point)

In the Schumpeterian R&D model of technological progress, the rate of technological progress depends on

Question 4 options:

	the cost of acquiring the resources to carry out R&D.
	the benefits that entrepreneurs reap from their innovations.
	the amount of resources required to create new technology.
	All of the above.
	None of the above is correct.

Question 5 (1 point)

According to the definitions in the textbook, the steady state in the simple Solow growth model occurs where

Question 5 options:

	K = I - K.
	f(K) = K.
	Y = C + I + G.
	f(K) > K.

Question 6 (1 point)

The Solow model shows that

Question 6 options:

	in the absence of technological progress, diminishing returns to investment prevent permanent economic growth.
	the static gains from international trade can have no effect on economic growth in the short-run or long-run.
	research shows that there is no relationship between international trade and economic growth.
	even if continuous technological progress occurs, permanent economic growth cannot occur.

Question 7 (1 point)

Given all other things remain constant, an increase in total profit,

Question 7 options:

	will shift PVI curve upward and hence equilibrium level of resources used in R&D activity will increase.
	will shift COI curve downward and hence equilibrium level of resources used in R&D activity will increase.
	will shift PVI curve downward and hence equilibrium level of resources used in R&D activity will increase.
	will shift COI curve upward and hence equilibrium level of resources used in R&D activity will decrease.

Question 8 (1 point)

Compared to a free trade equilibrium where there are no transport costs, transport costs

Question 8 options:

	cause the quantity exported/imported to rise..
	cause the price in the exporting country to rise.
	reduce the net welfare gains from international trade.
	cause the price in the importing country to fall.

Question 9 (1 point)

Competitive advantage refers to

Question 9 options:

	a country's lower opportunity costs in supplying a particular product.
	a firm's ability to supply a good to foreign markets at a lower price.
	a firm's advantage in providing its customers or potential customers with a greater value of goods and services.
	a firm's ability to be the first one to enter a new overseas market.

Question 10 (1 point)

In Schumpeter's model of "Creative Destruction," cost of innovation, COI,

Question 10 options:

	increases as total quantity of economy's resources, R, increases, given all other things remain constant.
	stays the same as total quantity of economy's resources, R, increases, given all other things remain constant.
	might increase or decrease as the total quantity of economy's resources, R, increases, given all other things remain constant.
	decreases as total quantity of economy's resources, R, increases, given all other things remain constant.

Question 11 (1 point)

Equilibrium level of R&D activity is determined by the

Question 11 options:

	COI curve alone.
	COI curve and the quantity of total resources in the economy.
	PVI curve alone.
	intersection of cost of innovation, COI and present value of an innovation, PVI curves.

Question 12 (1 point)

The term "factor accumulation" refers to:

Question 12 options:

	an increase in productive resources such as labor, capital, and land.
	the growth in national output.
	a decrease in productive resources such as labor, capital, and land.
	the increase in output that an economy generates as a result of economic growth.

Question 13 (1 point)

The effective rate of tariff measures the effect of a tariff on

Question 13 options:

	the final price of the finished product.
	the price of capital goods used in the finished product.
	the price of labor used in the finished product.
	the value added by an industry.

Question 14 (1 point)

A large number of statistical studies that have looked at the sources of economic growth have found

Question 14 options:

	evidence of a significant positive relationship between international trade and economic growth.
	no evidence of a significant relationship between international trade and economic growth.
	evidence of an insignificant negative relationship between international trade and economic growth.
	evidence of a significant negative relationship between international trade and economic growth.

Question 15 (1 point)

In the textbook, a product's value, V, defined as

Question 15 options:

	V = B*P, where B and P are benefits and price of the product, respectively.
	V = P/B, where P and B are price and benefits of the product, respectively.
	V = B/P, where B and P are benefits and price of the product, respectively.
	V = B + P, where B and P are benefits and price of the product, respectively

Question 16 (1 point)

According to the partial equilibrium model of international trade, in a market for a good in which a country does enjoy a comparative advantage, free trade will lead to welfare

Question 16 options:

	losses for the country's producers of the good that are larger in absolute value than the gains for the domestic consumers of the good.
	losses for the country's producers of the good that are the same as the gains for the domestic consumers of the good in absolute value.
	gains for the country's producers of the good that are larger in absolute value than the losses for the domestic consumers of the good.
	gains for the country's producers of the good that are smaller in absolute value than the losses for the domestic consumers of the good.

Question 17 (1 point)

Diminishing returns refers to

Question 17 options:

	a decrease in marginal output as equal amounts of a variable input are added to the production process while certain inputs remain unchanged.
	an increase in marginal output as equal amounts of a variable input are added to the production process while certain inputs remain unchanged.
	a decrease in total output as equal amounts of a variable input are added to the production process while certain inputs remain unchanged.

Question 18 (1 point)

An import quota is:

Question 18 options:

	a quantitative limit on the quantity of a certain product that is permitted to enter the domestic market from abroad.
	not used at all anymore although it used to be popular as a source of tax revenue.
	a tax on imports.
	a system of tariffs that according to the country that exports the good.

Question 19 (1 point)

Economists often favor tariffs over quotas because

Question 19 options:

	quotas can never be "equivalent" to tariffs.
	quotas tend to become more restrictive of trade than tariffs as demand grows.
	quotas are more efficient in allocating restricted trade among those who stand to gain the most from trade.
	tariffs provide government revenue while quotas do not.

Question 20 (1 point)

Buy Domestic" regulations:

Question 20 options:

	have no trade implications.
	protect domestic consumers.
	are perfectly correct under international trade agreements.
	restrict international trade.

Question 21 (1 point)

According to the Schumpeterian R&D model of technological progress, the rate of technological progress is faster, all other things equal:

Question 21 options:

	the higher is the cost of factors of production and resource.
	the lower is the efficiency of resources applied to R&D activities.
	the smaller is the excess profit of corporations.
	the lower is the interest rate.

Question 22 (1 point)

Technological progress is defined as

Question 22 options:

	the increase in the output that economy produces.
	the increase in the quantity of factors of production.
	an improvement in the efficiency with which an economy uses its resources and factors of production to produce welfare-enhancing output.

Question 23 (1 point)

Relative to free trade, in the importing country an import tariff

Question 23 options:

	reduces consumer surplus.
	reduces government revenue.
	reduces producer surplus.

Question 24 (1 point)

The Schumpeterian process of creative destruction is most likely greater under

Question 24 options:

	protection that raises domestic prices for import-competing producers.
	protection that reduces cutthroat competition and fosters cooperation among domestic producers.
	free trade that increases foreign competition.

Question 25 (1 point)

During the ninetenth century, transport costs:

Question 25 options:

	fell very little.
	represented the main reason why trade grew so slowly.
	rose sharply but trade grew rapidly anyway.
	fell sharply.