CHAPTER 12
Quick Check
1. a. True.
2. a. Most technological progress seems to come from R&D activities. See discussion on
b. This proposal would probably lead to lower growth in poorer countries, at least for a
c. This proposal would lead to an increase in R&D spending. If fertility did not fall, there
d. Presumably, this proposal would lead to a (small) decrease in the fertility of applied
e. This proposal would reduce the appropriability of drug research. Presumably, there
3. a. The economic leaders typically achieve technological progress by generating new ideas
b. Developing countries can import technology from the economic leaders by copying this
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c. Poor patent protection may facilitate a more rapid adoption of new technologies in
Dig Deeper
4. a. The growth rate of output per worker falls in the short run and continues to fall over time.
b. A permanent reduction in the saving rate has no effect on the steady-state growth rate of
5. a. Nominal GDP
b. Year 2 Real GDP (Year 1 Prices)=10(100)+10(230)=3300
c. GDP deflator
d. Real GDP/Worker
e. Year 2 Real GDP (Year 1 Prices)=10(100)+13(230)=3990
f. GDP deflator
g. Real GDP/worker=36.3 in year 2. Labor productivity growth is 36.3/30=21%.
h. This statement is true, assuming there is progress in the banking services sector.
6. a. i. K/(AN) = (s/(+gA+gN))2 = 1
b. i. K/(AN) = (s/(+gA+gN))2 = 0.64
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c. i. K/(AN) = (s/(+gA+gN))2 = 0.64
7. a. Probably affects A. Think of climate.
e. May affect K, H, and A. Lower tax rates increase the after-tax return on investment, and
f. If we interpret K as private capital, then infrastructure affects A (e.g., better transportation
g. Assuming no technological progress, a reduction in population growth implies an
Explore Further
8. a. The quantity gY – gN is the growth rate of output per worker. The quantity gK – gN is the
c. gY – gNgAgK – gN
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©2017 Pearson Education, Inc.
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