ECS4861
Advanced
Macroeconomics
Comprehensive Exam Review
Q&A
2024
, 1. Multiple Choice: What does the Solow Growth Model suggest is the
primary driver of economic growth in the long run?
a) Labor force growth
b) Capital accumulation
c) Technological progress
d) Natural resource availability
Answer: c) Technological progress. Rationale: The Solow Growth Model
emphasizes that long-term economic growth is most significantly influenced
by technological progress, which enhances productivity.
2. True/False: The Ricardian Equivalence theorem states that government
borrowing has the same effect on the economy as taxation.
Answer: True. Rationale: According to the Ricardian Equivalence,
consumers are forward-looking and will save more to pay for future taxes
that will be levied to repay the debt, thus neutralizing the effects of
government borrowing.
3. Fill-in-the-Blank: The _____________ is a concept in macroeconomics
that describes the trade-off between inflation and unemployment.
Answer: Phillips Curve. Rationale: The Phillips Curve illustrates the
inverse relationship between the rate of inflation and the rate of
unemployment.
Advanced
Macroeconomics
Comprehensive Exam Review
Q&A
2024
, 1. Multiple Choice: What does the Solow Growth Model suggest is the
primary driver of economic growth in the long run?
a) Labor force growth
b) Capital accumulation
c) Technological progress
d) Natural resource availability
Answer: c) Technological progress. Rationale: The Solow Growth Model
emphasizes that long-term economic growth is most significantly influenced
by technological progress, which enhances productivity.
2. True/False: The Ricardian Equivalence theorem states that government
borrowing has the same effect on the economy as taxation.
Answer: True. Rationale: According to the Ricardian Equivalence,
consumers are forward-looking and will save more to pay for future taxes
that will be levied to repay the debt, thus neutralizing the effects of
government borrowing.
3. Fill-in-the-Blank: The _____________ is a concept in macroeconomics
that describes the trade-off between inflation and unemployment.
Answer: Phillips Curve. Rationale: The Phillips Curve illustrates the
inverse relationship between the rate of inflation and the rate of
unemployment.
