Economics of Growth

JKPSC Assistant Professor (Economics) · Economics · 49 practice questions with answers and explanations: 1 Easy, 47 Medium, 1 Hard.

Sample questions

Sample Easy question 1

The Harrod–Domar model emphasises the role of:

  1. Saving and the capital–output ratio
  2. Technology only
  3. Labour supply only
  4. Exchange rates
Show answer

Answer: A. Growth is limited by how much is saved and how productive capital is.

Sample Medium question 2

The Harrod–Domar equilibrium is called a 'knife-edge' because:

  1. It lasts forever
  2. It needs no savings
  3. A small deviation from the warranted rate grows over time
  4. It holds only in a closed economy
Show answer

Answer: C. Instability is the main criticism.

Sample Medium question 3

The Solow model's production function has:

  1. Increasing returns to capital
  2. Constant returns to capital only
  3. No role for labour
  4. Diminishing returns to capital and constant returns to scale
Show answer

Answer: D. It is usually written Y = K^α (AL)^(1−α).

Sample Medium question 4

In the Solow model, long-run growth of output per worker comes from:

  1. Technological progress
  2. More capital per worker
  3. A higher saving rate
  4. A larger population
Show answer

Answer: A. A higher saving rate raises only the level.

Sample Hard question 5

The 'golden rule' level of capital in the Solow model maximises:

  1. The saving rate
  2. Steady-state consumption per worker
  3. Steady-state output per worker
  4. Population growth
Show answer

Answer: B. It occurs where the marginal product of capital equals n + δ.

More Economics topics for JKPSC Assistant Professor (Economics)

Related articles