Questions from Lectures, with
answers provided by Ron Lee.
The list was kindly compiled by a
student in the class.
Note that there is duplication in the iClicker
questions in the following list. I have
answered some questions multiple times.
Answers are highlighted in red.
16. Consequences of Population Size in
Relation to Land
Ronald Lee
Econ/Demog 175
March 11, 2011
Ronald Lee, UC Berkeley, 2011
2
Q. In our simple economy, population
growth will always
A. Lead to lower wages.
B. Lead to higher rents on land.
C. Sometimes lead to lower wages and higher
rents
D. It is impossible to say
E. Two of the above statements are true.
(After reaching point of land scarcity where
diminishing returns to labor begin).
Ronald Lee, UC Berkeley, 2011
3
Lecture 17. Surplus, Optimal
Population, and Malthus
Ronald Lee
Econ/Demog 175
March 15, 2011
Ronald Lee, UC Berkeley, 2011
4
Q1. Outside the region of abundant
land, and before the MPL=s, when the
population is larger, the income going
to landowners is:
A.
B.
C.
D.
Greater
Unchanged
Smaller
Impossible to say
Ronald Lee, UC Berkeley, 2011
5
Q2. According to the theory discussed in the last
lecture, serfdom or slavery:
A. Can only arise if the land is densely settled.
B. Might not arise when the land is sparsely
settled.
C. Cannot occur when population is sparse if
there is also a landowning class that does
not work.
D. None of the above.
Ronald Lee, UC Berkeley, 2011
6
Q3. Which statement about surplus is
correct?
A. Total surplus is the difference between total output
and the per capita subsistence needs of the
population.
B. Surplus always increases as population increases.
C. Surplus is greatest at some intermediate size of
population.
D. If the weather is bad for agriculture some year, we
would expect surplus to be higher.
Ronald Lee, UC Berkeley, 2011
7
Q4. Which statement is true about the optimal
size of population under our assumptions?
A. The average person is always better off if the population is
smaller.
B. Landowners will always be better off if the population is
larger.
C. Workers will always be better off if the population is smaller.
D. The population that maximizes military power will always be
larger than the population that maximizes per capita income
E. The population that maximizes total surplus is less than or
equal to the population that maximizes per capita income.
Ronald Lee, UC Berkeley, 2011
8
Q5. If the whole mortality curve is higher, then
what happens to w*, the wage at which
population growth is zero?
A. w* will be lower due to the worse health
conditions.
B. w* will not change, because it depends on other
forces.
C. w* will be higher because fertility will have to be
higher to achieve zero population growth.
D. None of the above.
Ronald Lee, UC Berkeley, 2011
9
Q6. The Malthusian system is stable which
means that if a temporary shock does not
change the relationships, then:
A. All the variables will gradually return to their
original values.
B. It will not be displaced even temporarily from
equilibrium.
C. It will return to equilibrium, but not
necessarily to the same values as before.
Ronald Lee, UC Berkeley, 2011
10
Lecture 18. Malthus (cont.)
Ronald Lee
Econ/Demog 175
March 17, 2011
Ronald Lee, UC Berkeley, 2011
11
Q. The germ theory of disease is accepted and
everyone starts washing their hands and boiling
water. At the same time, a law is passed reducing the
legal age at marriage from 21 to 18. What happens?
A. The equilibrium wage rises.
B. The equilibrium wage falls.
C. Either is possible; we can’t say.
Ronald Lee, UC Berkeley, 2011
12
Lecture 19. Boserup
Ronald Lee
Econ/Demog 175
March 29, 2011
Ronald Lee, UC Berkeley, 2011
13
Q. According to Malthus, would a program of breaking
up the estates of large land owners and distributing the
land to landless workers improve human welfare in the
long term?
A. Yes, poverty would be reduced.
B. This program would temporarily reduce poverty but
in the long term, wages would be the same as before.
C. The number of poor people would be increased.
D. Two of the above.
E. All of the above.
Ronald Lee, UC Berkeley, 2011
14
Q. A foreign aid program introduces a family planning
program and a health care program to a poor Third
World country. What effect on human welfare should
we expect from a Malthusian or other perspective?
A.
B.
C.
D.
Due to more rapid population growth from lower mortality,
welfare will decline.
Better health and lower mortality will be of great value in
themselves to the people, so their welfare will rise.
Population growth rates will fall due to lower fertility, so
welfare will be better than otherwise.
Each of these three could be defended as an answer, but not
all at the same time.
Ronald Lee, UC Berkeley, 2011
15
Q. Following Boserup’s thinking, more
dense populations might lead to
technological progress because
A. Transportation and communications are cheaper in
a denser population.
B. The rewards to innovation are greater when
population is dense.
C. A denser population can sustain an urban
population, which is more likely to be
technologically innovative.
D. All of the above.
E. Two of the above.
Ronald Lee, UC Berkeley, 2011
16
Lecture 21. Pop and Environment
(cont.) and start Pop Aging
Ronald Lee
Econ/Demog 175
April 5, 2011
Ronald Lee, UC Berkeley, 2011
17
Q. Boserup argues that as population growth makes a
resource become more scarce, society defines new property
rights in that resource. Which of the following are examples?
A.
B.
C.
D.
E.
Land
Water
Ozone layer
Biodiversity
Two of the above
Ronald Lee, UC Berkeley, 2011
18
Q. Nonrenewable resources are finite and
can be used up, like oil, but renewable
resources last forever. True or False?
A. True
B. False
C. It depends…
Ronald Lee, UC Berkeley, 2011
19
Q. Which of the following would not be an
example of natural capital?
A.
B.
C.
D.
E.
The hole in the ozone layer.
A rain forest.
Sunlight falling on the earth.
Top soil
A fishery
Ronald Lee, UC Berkeley, 2011
20
Q. Public policy should seek to maximize which
of the following, in your opinion?
A. Per capita income.
B. A mix of population size and per capita income,
say U=Pop1/2y1/2 .
C. A mix of population size, per capita income, and
biodiversity or well-being of other species of
plants and animals.
D. Any of the above, but only at a sustainable
level.
E. Some other criterion.
There is no single right answer; this is just asking for
your personal view.
Ronald Lee, UC Berkeley, 2011
21
Lecture 22. Population Aging
Ronald Lee
Econ/Demog 175
April 7, 2011
Ronald Lee, UC Berkeley, 2011
22
Q. Which one of the following statements
is true?
A. If one more year of work leads to a higher pension
thereafter, then the pension accrual is positive.
B. If pension accrual is positive, then one more year
of work leads to a higher pension thereafter.
C. If the implicit tax is positive then pension accrual
must be negative.
D. All of the above.
E. Two of the above (B and C).
Ronald Lee, UC Berkeley, 2011
23
Q. The tax force to retire
A. Is bigger if the implicit tax is generally higher.
B. The tax force to retire is higher if the payroll
tax is lower.
C. is positively associated with labor force
participation at older ages.
D. All of the above.
Ronald Lee, UC Berkeley, 2011
24
Q. If the analysis of Gruber and Wise is correct,
then which of the following actions would be
expected to raise labor force participation at
older ages?
A. reduce payroll tax rates.
B. raise the pension benefit level for each
additional year a person works.
C. Both of the above.
Ronald Lee, UC Berkeley, 2011
25
Lecture 23. Economics of Aging
and Retirement (2)
Ronald Lee
Econ/Demog 175
April 12, 2011
Ron Lee, UC Berkeley, 2011
26
Q. Which one of the following
statements is true? (duplicates an
earlier question)
A. If one more year of work leads to a higher
pension thereafter, then the pension accrual is
positive.
B. If pension accrual is positive, then one more
year of work leads to a higher pension
thereafter.
C. If the implicit tax is positive then pension
accrual must be negative.
D. All of the above.
E. Two of the above. (B and C)
Ron Lee, UC Berkeley, 2011
27
Q. The tax force to retire
A. Is bigger if the implicit tax is generally
higher.
B. The tax force to retire is higher if the
payroll tax is lower.
C. is positively associated with labor force
participation at older ages.
D. All of the above.
Ron Lee, UC Berkeley, 2011
28
Q. If the analysis of Gruber and Wise is
correct, then which of the following actions
would be expected to raise labor force
participation at older ages?
A. reduce payroll tax rates.
B. raise the pension benefit level for each
additional year a person works.
C. Both of the above.
Ron Lee, UC Berkeley, 2011
29
Lecture 23. Finish Retirement,
Start Pension Theory
Ronald Lee
Econ/Demog 175
April 19, 2011
Ronald Lee, UC Berkeley, 2011
30
Q. The tax force to retire
A. Is bigger if the implicit tax is generally
higher.
B. The tax force to retire is higher if the
payroll tax is lower.
C. is positively associated with labor force
participation at older ages.
D. All of the above.
Ron Lee, UC Berkeley, 2011
31
Q. If the analysis of Gruber and Wise is
correct, then which of the following actions
would be expected to raise labor force
participation at older ages?
A. reduce payroll tax rates.
B. raise the pension benefit level for each
additional year a person works.
C. Both of the above.
Ron Lee, UC Berkeley, 2011
32
Q. In a stationary population, the rate of
return is:
A.
B.
C.
D.
E.
Zero
Minus 100%
Plus 100%
Undefined
None of the above
(True only if there is no productivity growth.)
Ronald Lee, UC Berkeley, 2011
33
Q. The implicit rate of return
A. Will be higher if the benefits are reduced
and the contribution rate stays the same;
B. Will be higher if benefits stay the same
and the contribution rate is reduced;
C. Will be higher if mortality is higher and
contributions and benefits are the same;
D. None of the above.
Ronald Lee, UC Berkeley, 2011
34
Q. A defined contribution pension
system is
A. A system in which each contributor has his or
her own account backed up by real assets, like
a IRA.
B. A system in which each contributor pays
defined amounts into the system.
C. A system in which each contributor gets a
specified benefit level regardless of the
contributions he or she has made.
D. A system with a guaranteed implicit rate of
return.
E. Two of the above.
(Note that in a Notional Defined Contribution
system, NDC, there are no real assets, however.)
Ronald Lee, UC Berkeley, 2011
35
Lecture 25. Social Security
Ronald Lee
Econ/Demog 175
April 19, 2011
UC Berkeley, Ron Lee, 2011
36
Q. The implicit rate of return
A. Will be higher if the benefits are reduced
and the contribution rate stays the same;
B. Will be higher if benefits stay the same and
the contribution rate is reduced;
C. Will be higher if mortality is higher and
contributions and benefits are the same;
D. None of the above.
UC Berkeley, Ron Lee, 2011
37
Q. A defined contribution pension system
is
A. A system in which each contributor has his or her
own account, usually backed up by real assets, like
an IRA.
B. A system in which each contributor pays defined
amounts into the system.
C. A system in which each contributor gets a specified
benefit level regardless of the contributions he or
she has made.
D. A system with a guaranteed implicit rate of return.
E. Two of the above (A and B).
UC Berkeley, Ron Lee, 2011
38
Q. Which of the following statements is
true?
A. Our Social Security system is in worse shape than
the French system.
B. To fix our system by increasing revenues, we would
need to raise the payroll tax by about 8%, starting
immediately.
C. Because the US Social Security system is Pay As You
Go, it does not have a trust fund.
D. All of the above.
E. None of the above.
UC Berkeley, Ron Lee, 2011
39
Q. Which of the following statements are
false?
A. The Social Security replacement rate is about 40%.
B. The Trust Fund is projected to be exhausted around
2037.
C. The payroll tax rate for Social Security is around
25%.
D. It violates economic rationality to invest in
government bonds earning only 3% real rate of
return when it is possible to earn an average return
of 7% in the stock market.
E. Two of the above. (C and D).
UC Berkeley, Ron Lee, 2011
40
Q. Which of the following policy options is
really a cut in benefits?
A. Raising the normal age at retirement.
B. Reducing the size of the cost of living
adjustment.
C. Raising the early age at retirement.
D. Indexing the benefit level to inflation rather
than to the nominal wage level.
E. All of the above.
UC Berkeley, Ron Lee, 2011
41
Lecture 26. Social Security, and Which
Generations Win or Lose Through
Public Transfers?
Ronald Lee
Econ/Demog 175
April 21, 2011
UC Berkeley, Ron Lee, 2011
42
Q. Which of the following statements is
true?
A. Our Social Security system is in worse shape than
the French system.
B. To fix our system by increasing revenues, we would
need to raise the payroll tax by about 8%, starting
immediately.
C. Because the US Social Security system is Pay As You
Go, it does not have a trust fund.
D. All of the above.
E. None of the above.
UC Berkeley, Ron Lee, 2011
43
Q. Which of the following statements are
false?
A. The Social Security replacement rate is about 40%.
B. The Trust Fund is projected to be exhausted around
2037.
C. The payroll tax rate for Social Security is around
25%.
D. It violates economic rationality to invest in
government bonds earning only 3% real rate of
return when it is possible to earn an average return
of 7% in the stock market.
E. Two of the above.
UC Berkeley, Ron Lee, 2011
44
Q. Which of the following policy options is
really a cut in benefits?
A. Raising the normal age at retirement.
B. Reducing the size of the cost of living
adjustment.
C. Raising the early age at retirement.
D. Indexing the benefit level to inflation rather
than to the nominal wage level.
E. All of the above.
UC Berkeley, Ron Lee, 2011
45
27. Population and Economic
Growth
Ronald Lee
Econ/Demog 175
April 26, 2011
UC Berkeley, Ronald Lee, 2011
46
Q. In a steady state with no technical progress,
which growth rates are equal?
A. Per capita income and population
B. Population and total output
C. Capital and Population
D. Capital and per capita income
E. Two of the above (B and C)
UC Berkeley, Ronald Lee, 2011
47
Q. Other things equal, if the population growth rate is
more rapid then, in steady state,
A.
B.
C.
D.
E.
Per capita income is lower
Capital per worker is less
Per capita income falls without limit
Total output rises more rapidly
One of the above is false (C)
UC Berkeley, Ronald Lee, 2011
48
Lecture 28. The Theoretical Basis
for Population Policy
Ronald Lee
Econ/Demog 175
April 28, 2011
UC Berkeley, Ron Lee, 2011
49
Q. Which Soc Sec policy change would be
enough to solve the long term imbalance?
A. Index benefits to prices rather than wages
B. Raise the payroll tax by four percentage
points.
C. Raise retirement age from 67 to 70.
D. Eliminate the income cap for payroll tax.
E. Two of the above. (A and B).
UC Berkeley, Ron Lee, 2011
50
Q. The case for laissez faire regarding
fertility rests on which of the following
statements?
A. Social welfare is nothing more than the sum of the
individual utilities of its members.
B. Individuals strive to maximize their own utilities
through the choices they make, including choices
about fertility.
C. Parents are altruistic towards their children, so the
decisions they make about fertility also reflect their
children’s interests.
D. All of the above.
E. Two of the above.
UC Berkeley, Ron Lee, 2011
51
Q. What feature of the commons was essential
to Hardin’s argument?
A. It was owned in common, so each herder was free
to choose how many cows to graze on it.
B. The marginal social cost of adding a cow was
greater than the marginal individual cost.
C. When all herders were done making their choices,
the total social cost of the last cow exceeded the
total social benefit.
D. All of the above.
UC Berkeley, Ron Lee, 2011
52
Q. The case for government intervention (against
laissez faire) rests on which of the following
statements?
A. The costs and benefits faced by individuals
choosing fertility are different than the full social
costs and benefits of their fertility.
B. Potential parents will take into account the taxes
their children will pay as adults, helping to pay the
costs of Social Security.
C. All of the above
D. None of the above.
UC Berkeley, Ron Lee, 2011
53