Growth

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  • Topic: Economic growth, Exogenous growth model, Endogenous growth theory
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UNIVERSITY OF MANCHESTER
Econ 20332: Developing Countries in the International Economy Midterm Exam March 1, 2012.

Time: 60 minutes

Answer 3 Questions from Section A and 1 Question from Section B

(For multiple choice questions there will be no negative for wrong or unanswered questions.)

Please enter your answers for Section B in the Answer Book and for Section A the Multiple Choice Sheet provided.

THIS PAPER MUST NOT BE REMOVED FROM THE EXAMINATION ROOM.

The use of electronic calculators is not permitted.

P.T.O

SECTION A: Answer any 3

1. The Solow model emphasizes the role of which of the following factors of production? (a) Land
(b) Labor
(c) Capital
(d) Natural resources [16 marks]

2. In an exogenous growth model, growth is caused by
(a) capital accumulation.
(b) government policies.
(c) human capital accumulation.
(d) forces that are not explained by the model itself. [16marks]

3. Suppose that two countries share identical levels of total factor productivity, identical labor force growth rates and identical savings rates. According to the Solow model (a) the country with the greater initial level of output per worker will grow more rapidly than the country with the smaller initial level of output per worker. (b) the country with the smaller initial level of output per worker will grow more rapidly than the country with the greater initial level of output per worker. (c) both countries will have the same growth rates of output per worker, even if they start out with different levels of output per worker.

(d) if both countries start out with different levels of income per worker, both countries may have different growth rates of output per worker, but we cannot be certain which country will have the higher growth rate of output per worker. [16 marks]

4. In the endogenous growth model, an increase in a worker’s level of human capital (a) increases the amount of additional human capital...
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