Economic Growth & Development Section/ Rita Hanna/ 2024
Economic Growth & Development
Section (3) – Questions
Drivers of Economic Growth – Part 2
True and false questions:
1) The technical progress is neutral, when it raises the marginal productivity of capital and
labor in the same proportion at the given capital-labor ratio or alternatively, it leaves the
capital-labor ratio unchanged.
2) The technical progress is said to be labor-saving, when it raises the marginal productivity
of capital relative to that of labor at constant ratio of capital to labor.
3) In case of labor- saving or capital-using technical progress, the capital- labor ratio marks
an increase.
4) The technical progress is said to be capital-saving, when it raises the marginal productivity
of capital relative to that of labor at constant ratio of capital to labor.
5) In case of capital- saving or labor-using technical progress, the capital- labor ratio marks
an increase.
6) Neutral technological progress shifts the isoquant outwards, but leaves the MRTSL,K
unchanged along any ray from the origin.
7) Labor-saving technological progress results in an increase in the MRTSL,K along any ray
from the origin.
8) Capital-saving technological progress results in an increase in the MRTSL,K along any ray
from the origin.
9) According to Kuznets, the main factor that contributes to the high rate of Economic growth
in industrialized countries was the high rate of structural transformation.
10) The equality in the spread of Economic growth is one of the six characteristics of
modern Economic growth.
11) The total factor productivity represents the effect of technology on production.
12) The shift of labor from self-employed to employee is a feature of high rate of
structural transformation in the Economy.
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Economic Growth & Development Section/ Rita Hanna/ 2024
Choose the correct answer:
1) Neutral technological progress shifts the isoquant inwards, for any given capital-labor ratio,
the MRTSL,K ……………
A. Decrease
B. Increases
C. Remain unchanged
D. None of the above
2) Labor-saving technological progress, along any ray from the origin the MRTSL,K
……………
A. Decrease
B. Increases
C. Remain unchanged
D. None of the above
3) Capital-saving technological progress, along any ray from the origin the MRTSL,K
……………
A. Decrease
B. Increases
C. Remain unchanged
D. None of the above
4) There is no change in capital-labor ratio, this signifies that technical progress is
……………
A. Labor-saving
B. Capital-saving
C. Capital deepening
D. None of the above
5) There is a raise in capital-labor ratio, this signifies that technical progress is ……………
A. Labor-saving
B. Capital-saving
C. Neutral
D. None of the above
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Economic Growth & Development Section/ Rita Hanna/ 2024
6) There is a decline in capital-labor ratio, this signifies that technical progress is ……………
A. Labor-saving
B. Capital-saving
C. Neutral
D. None of the above
7) According to Kuznets, the main factor that contributes to the high rate of Economic growth
in industrialized countries is ……………
A. Rapid growth in income per capita
B. Rapid growth in total factor productivity
C. High rates of social and ideological transformation
D. High rates of structural transformation in the Economy
