Question 1

Suppose the following situation exists for an economy: Kt₊₁ / N < Kt / N.Given this information,we know that

Accepted Answer

A)  saving per worker equals depreciation per worker in period t.
B)  consumption per worker will tend to fall as the economy adjusts to this situation.
C)  saving per worker is greater than depreciation per worker in period t.
D)  the saving rate increased in period t.
E)   none of the above

Question 2

Based on our understanding of the model presented in chapter 11,which of the following will cause a permanent increase in growth?

Accepted Answer

A)  an increase in education spending
B)  an increase in the saving rate
C)  an increase in capital accumulation
D)  all of the above
E)   none of the above

Question 3

Suppose two countries are identical in every way with the following exception.Economy A has a higher rate of depreciation (δ) than economy B.Given this information,we know with certainty that

Accepted Answer

A)  steady state consumption in A is higher than in B.
B)  steady state consumption in A is lower than in B.
C)  steady state consumption in A and in B are equal.
D)  steady state growth of output per worker is higher in A than in B.
E)   none of the above

Question 4

If the saving rate is 1 (i.e.,s = 1) ,we know that

Accepted Answer

A)  K / N will be at its highest level.
B)  Y / N will be at its highest level.
C)  C / N = 0.
D)  all of the above

Question 5

When an economy is operating at the steady state,we know that

Accepted Answer

A)  steady state saving equals consumption.
B)  steady state saving is less than total consumption.
C)  steady state saving is equal to depreciation per worker.
D)  steady state saving exceeds depreciation each year by a constant amount.
E)   none of the above

Question 6

When steady state capital per worker is above the golden-rule level,we know with certainty that an increase in the saving rate will

Accepted Answer

A)  increase consumption in both the short run and the long run.
B)  decrease consumption in both the short run and the long run.
C)  decrease consumption in the short run, and increase it in the long run.
D)  increase consumption in the short run, and decrease it in the long run.
E)   none of the above

Question 7

In the model where it is assumed that the state of technology does not change,what parameters and / or variables cause changes in steady state output per worker.

Accepted Answer

In general,output per worker will depend...

Question 8

Explain what human capital is and discuss how changes in human capital can affect output per worker.

Accepted Answer

Human capital represents the set of skil...

Question 9

Which of the following will cause an increase in output per worker in the long run?

Accepted Answer

A)  an increase in the saving rate
B)  a reduction in the depreciation rate
C)  an increase in the stock of human capital
D)  all of the above

Question 10

Suppose the saving rate is initially less than the golden rule saving rate.We know with certainty that a reduction in the saving rate will cause

Accepted Answer

A)  a reduction in the capital labor ratio.
B)  a reduction in output per worker.
C)  a reduction in consumption per worker.
D)  all of the above
E)   none of the above D

Question 11

The capital-labor ratio will tend to decrease over time when

Accepted Answer

A)  investment per worker equals saving per worker.
B)  investment per worker is less than saving per worker.
C)  investment per worker exceeds depreciation per worker.
D)  saving per worker equals depreciation per worker.
E)   output per worker exceeds capital per worker.

Question 12

In the model where it is assumed that the state of technology does not change,what parameters and / or variables cause changes in steady state output per worker?

Accepted Answer

A)  savings rate
B)  depreciation rate
C)  human capital per worker
D)  all of above
E)   none of above

Question 13

Suppose there are two countries that are identical in every way with the following exception: Country A has a higher stock of human capital than country B.Given this information,we know with certainty that

Accepted Answer

A)  the growth rate will be higher in A than in B.
B)  the growth rate will be the same in the two countries.
C)  output per worker will be the same in the two countries.
D)  K / N will be higher in B.

Question 14

Suppose the following situation exists for an economy: Kt₊₁ / N = Kt / N.Given this information,we know with certainty that

Accepted Answer

A)  the economy is operating at the golden rule equilibrium in period t.
B)  saving per worker is less than depreciation per worker in period t.
C)  saving per worker is greater than depreciation per worker in period t.
D)  investment per worker equals depreciation per worker in period t.

Question 15

Explain what condition must occur for each of the following to occur: (1)the capital stock to increase; (2)the capital stock to decrease; and (3)the capital stock to remain constant.

Accepted Answer

The equation for the change in the capital stock (per worker)is given by the following: (Kt₊₁ / N)- (Kt / N)= s(Yt / N)- δ(Kt / N).The capital stock will not change when investment equals depreciation.If investment / saving exceeds (is less than)depreciation,the capital stock will grow (decline).

Question 16

The Social Security system in the United States was introduced in which year?

Accepted Answer

A)  1915
B)  1935
C)  1945
D)  1955
E)   none of the above

Question 17

Graphically illustrate and explain the effects of an increase in the rate of depreciation (δ)on the Solow growth model.In your graph,clearly label all curves and equilibria.

Accepted Answer

The depreciation line becomes steeper an...

Question 18

A reduction in the saving rate will not affect which of the following variables in the long run?

Accepted Answer

A)  output per worker
B)  the growth rate of output per worker
C)  the amount of capital in the economy
D)  capital per worker
E)   none of the above

Question 19

The countries with the lowest output per capita

Accepted Answer

A)  are rich with human capital, but have little physical capital.
B)  are rich with physical capital, but have little human capital.
C)  are poor in both human and physical capital.
D)  have low living standards in spite of relatively high levels of both human and physical capital.
E)   may or may not be poor in human capital, depending on whether the exchange rate or purchasing power parity method is used for comparison. C

Question 20

As an economy adjusts to an decrease in the saving rate,we would expect output per worker

Accepted Answer

A)  to decrease at a constant rate and continue decreasing at that rate in the steady state.
B)  to decrease at a permanently higher rate.
C)  to increase at a permanently higher rate.
D)  to return to its original level.
E)   none of the above

Exam 11: Saving, capital Accumulation, and Output

Suppose the following situation exists for an economy: Kt₊₁ / N < Kt / N.Given this information,we know that

Correct Answer
verified

Based on our understanding of the model presented in chapter 11,which of the following will cause a permanent increase in growth?

Correct Answer
verified

Suppose two countries are identical in every way with the following exception.Economy A has a higher rate of depreciation (δ) than economy B.Given this information,we know with certainty that

Correct Answer
verified

If the saving rate is 1 (i.e.,s = 1) ,we know that

Correct Answer
verified

When an economy is operating at the steady state,we know that

Correct Answer
verified

When steady state capital per worker is above the golden-rule level,we know with certainty that an increase in the saving rate will

Correct Answer
verified

In the model where it is assumed that the state of technology does not change,what parameters and / or variables cause changes in steady state output per worker.

Correct Answer
verified
In general,output per worker will depend...
View Answer

Explain what human capital is and discuss how changes in human capital can affect output per worker.

Correct Answer
verified
Human capital represents the set of skil...
View Answer

Which of the following will cause an increase in output per worker in the long run?

Correct Answer
verified

Suppose the saving rate is initially less than the golden rule saving rate.We know with certainty that a reduction in the saving rate will cause

Correct Answer
verified
D

The capital-labor ratio will tend to decrease over time when

Correct Answer
verified

In the model where it is assumed that the state of technology does not change,what parameters and / or variables cause changes in steady state output per worker?

Correct Answer
verified

Suppose there are two countries that are identical in every way with the following exception: Country A has a higher stock of human capital than country B.Given this information,we know with certainty that

Correct Answer
verified

Suppose the following situation exists for an economy: Kt₊₁ / N = Kt / N.Given this information,we know with certainty that

Correct Answer
verified

Explain what condition must occur for each of the following to occur: (1)the capital stock to increase; (2)the capital stock to decrease; and (3)the capital stock to remain constant.

The Social Security system in the United States was introduced in which year?

Correct Answer
verified

Graphically illustrate and explain the effects of an increase in the rate of depreciation (δ)on the Solow growth model.In your graph,clearly label all curves and equilibria.

Correct Answer
verified
The depreciation line becomes steeper an...
View Answer

A reduction in the saving rate will not affect which of the following variables in the long run?

Correct Answer
verified

The countries with the lowest output per capita

Correct Answer
verified
C

As an economy adjusts to an decrease in the saving rate,we would expect output per worker

Correct Answer
verified

Exam 11: Saving, capital Accumulation, and Output

Suppose the following situation exists for an economy: Kt₊₁ / N < Kt / N.Given this information,we know that

Correct AnswerverifiedShow Answer

Based on our understanding of the model presented in chapter 11,which of the following will cause a permanent increase in growth?

Correct AnswerverifiedShow Answer

Suppose two countries are identical in every way with the following exception.Economy A has a higher rate of depreciation (δ) than economy B.Given this information,we know with certainty that

Correct AnswerverifiedShow Answer

If the saving rate is 1 (i.e.,s = 1) ,we know that

Correct AnswerverifiedShow Answer

When an economy is operating at the steady state,we know that

Correct AnswerverifiedShow Answer

When steady state capital per worker is above the golden-rule level,we know with certainty that an increase in the saving rate will

Correct AnswerverifiedShow Answer

In the model where it is assumed that the state of technology does not change,what parameters and / or variables cause changes in steady state output per worker.

Correct AnswerverifiedIn general,output per worker will depend...View AnswerShow Answer

Explain what human capital is and discuss how changes in human capital can affect output per worker.

Correct AnswerverifiedHuman capital represents the set of skil...View AnswerShow Answer

Which of the following will cause an increase in output per worker in the long run?

Correct AnswerverifiedShow Answer

Suppose the saving rate is initially less than the golden rule saving rate.We know with certainty that a reduction in the saving rate will cause

Correct AnswerverifiedD

The capital-labor ratio will tend to decrease over time when

Correct AnswerverifiedShow Answer

In the model where it is assumed that the state of technology does not change,what parameters and / or variables cause changes in steady state output per worker?

Correct AnswerverifiedShow Answer

Suppose there are two countries that are identical in every way with the following exception: Country A has a higher stock of human capital than country B.Given this information,we know with certainty that

Correct AnswerverifiedShow Answer

Suppose the following situation exists for an economy: Kt₊₁ / N = Kt / N.Given this information,we know with certainty that

Correct AnswerverifiedShow Answer

Explain what condition must occur for each of the following to occur: (1)the capital stock to increase; (2)the capital stock to decrease; and (3)the capital stock to remain constant.

The Social Security system in the United States was introduced in which year?

Correct AnswerverifiedShow Answer

Graphically illustrate and explain the effects of an increase in the rate of depreciation (δ)on the Solow growth model.In your graph,clearly label all curves and equilibria.

Correct AnswerverifiedThe depreciation line becomes steeper an...View AnswerShow Answer

A reduction in the saving rate will not affect which of the following variables in the long run?

Correct AnswerverifiedShow Answer

The countries with the lowest output per capita

Correct AnswerverifiedC

As an economy adjusts to an decrease in the saving rate,we would expect output per worker

Correct AnswerverifiedShow Answer

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In general,output per worker will depend...
View Answer

Correct Answer
verified
Human capital represents the set of skil...
View Answer

Correct Answer
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Correct Answer
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D

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Correct Answer
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Correct Answer
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The depreciation line becomes steeper an...
View Answer

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C

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