Question 1: Short Answer Questions ........................................................ 50 points (i) (5 points) Assume a standard Cobb-Douglas production function, Y = A_K1/4L3/4 Le. a = 1/4. Consider the data in Table 1 below for the US. The growth rate of GDP per worker must be Table 1: Question Ii 91/ 9A 9K 2.0 0.6 1 A. 0.47 B. 0.60 Customise and control Google Chrome D. 0.93 (ii) (5 points) Investment expenditures usually account for about percent of US GDP. A. 3 B. 18 C. 41 D. 66 (iii) (5 points) By how much does GDP rise in the following scenario? The local Lamborghini dealer sells a new car for $250,000 and the price of the car when it is imported from Italy is $225,000. A. no change. B. an increase of $250,000. C. an increase of $25,000. D. a decrease of $225,000. (iv) (5 points) Which of the following does NOT explain differences in total factor productivityi)? property rights the size of the labor force infrastructure 50.03? the level of education (v) (5 points) Which of the following is a non-rival good? A. a TV signal B. a dam C. an engineering blueprint of an electric car. D. All of these answers are correct. (vi) (5 points) _If Y is the total production of vaccines, X is the total amount of spending to produce vaccines, F is the initial (R&D) cost associated with production, and C is the cost of producing each vaccine, which of the following production functions exhibits increasing returns? A. CXF B. X+FC C. (FX)/C D. (XF)/C (vii) (5 points) The reason Why economic growth in Luxembourg is greater than the growth rate in the United States is . that Luxembourg has more researchers. . the globalization of ideas. . that it has a higher level of capital stock. . that there are more resources in the United States, and diminishing returns to natural resources. UOUJI> (viii) (5 points) Which property studied in the theory of economic growth do countries exhibit after 1990 in Figure 1 ? A. Absolute convergence. B. Growth accounting. C. Balanced growth. D. Great divergence. (3) Average growth _m:v "' \"WW ... .1 0 Middle income 0 Low income I . llllf'i " 1960 19651970 19751980 198519901995 2000 2005 2010 Initial Year Figure 1: Question viii Note: The vertical axis is annual growth rates of GDP per capita. The bottom most line in 2005 in blueish purple are high income countries. (ix) (5 points) Assume that in Mexico, the average annual per capita GDP growth rate is 3 percent per year. per capita GDP in 1965 was $1,000. In 2015, Mexico's per capita GDP would have been about A. $1,942; B. $48,544; C. $9,179; D. $4,384;(x) (5 points) Consider the following data on USA and Argentina GDP per capita in their respective local currencies. Table 2: Question 1x GDP pc (local currency) USA 58,500 USD Argentina 218,000 ARS 1 US dollar was equal to 9 Argentinian Pesos (ARS) in the foreign exchange market. Further, overall prices in Argentina were 70% of the US. Calculate Argentina's relative real GDP per capita to the US