Economics/African American Studies 363
Study Guide
Midterm #1
Spring 2013
Professor Robert A. Margo
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1. Basics of Long Term Growth: per capita income as a summary statistic of
economic growth; measurement problems; concept of a growth rate; the aggregate
production function; growth accounting; two sector models and the shift of labor
out of agriculture; Solow growth model and convergence; convergence in per
capita incomes across US states.
2. Economic Growth Around the World: differences in per capita income across
countries – how recent? (paper by Pritchett); the “Great Divergence and the
Industrial Revolution; US ascendancy and manufacturing (paper by Gavin
Wright).
3. Basics of US Economic History: growth of total GNP and per capita income;
business cycles; growth accounting; structural change; regional differences in per
capita income; demographic change; education; inequality (Kuznets Curve); the
Great Depression and the Great Compression.
Sample Midterm Questions:
Briefly define, explain, or comment on the significance of:
Growth in labor productivity and capital deepening
the “index number problem”
the returns to schooling and the High School Movement
beta vs. sigma convergence in per capita incomes
True, Partly True, False and WHY: As described by the “classical” theory of the
demographic transition, fertility declined in the United States before mortality did.
3. Using the two-sector general equilibrium model discussed in class, trace through
the effect of the increase in the aggregate supply of capital on the share of the
labor force in manufacturing, assuming that both the price and income elasticities
of the demand for agriculture goods are less than one.
4. Briefly explain the difference between the monetary vs. Keynesian accounts of
the onset of the Great Depression. Do data on nominal interest rates and the price
level help to distinguish between the two theories?
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