Question 1

Which of the following is not a flow variable?

Accepted Answer

A)  investment
B)  saving
C)  the money supply
D)  output
E)   all of the above

Question 2

For this question assume that technological progress does not occur.The rate of saving in Canada has generally been greater than the saving rate in the U.S.Given this information,we know that in the long run

Accepted Answer

A)  Canada's growth rate will be greater than the U.S. growth rate.
B)  investment per worker in Canada will be no different than U.S. investment per worker.
C)  capital per worker in Canada will be no different than U.S. capital per worker.
D)  all of the above
E)   none of the above

Question 3

The golden rule level of capital refers to

Accepted Answer

A)  the level of capital that maximizes output per worker.
B)  the level of capital that maximizes the standard of living.
C)  the level of capital that maximizes consumption per worker in the steady state.
D)  all of the above
E)   none of the above

Question 4

Which of the following represents the effects in period t of an increase in the saving rate in period t?

Accepted Answer

A)  no change in K / N
B)  no change in Y / N
C)  a reduction in C / N
D)  all of the above

Question 5

At the current steady state capital-labor ratio,assume that the steady state level of per capita consumption,(C / N) *,is less than the golden rule level of steady state per capita consumption.Given this information,we can be certain that

Accepted Answer

A)  an increase in the saving rate will cause an increase in the steady state level of per capita consumption ((C / N) *) .
B)  a reduction in the capital-labor ratio will cause a reduction in (C / N) *.
C)  the capital labor ratio will tend to increase over time.
D)  the capital labor ratio will tend to decrease over time.
E)   a reduction in the saving rate will have an ambiguous effect on (C / N) *.

Question 6

Suppose an economy experiences a 5% increase in human capital.We know that this will cause

Accepted Answer

A)  Y / N to increase by more than 5%.
B)  Y / N to increase by exactly 5%.
C)  Y / N to increase by less than 5%.
D)  no change in Y / N.
E)   a reduction in output per worker.

Question 7

At the current steady state capital-labor ratio,assume that the steady state level of per capita consumption,(C / N) *,is greater than the golden rule level of steady state per capita consumption.Given this information,we can be certain that

Accepted Answer

A)  a reduction in the saving rate will cause a decrease in the steady state level of per capita consumption ((C / N) *) .
B)  an increase in the capital-labor ratio will cause an increase in (C / N) *.
C)  the capital labor ratio will tend to decrease over time.
D)  the capital labor ratio will tend to increase over time.
E)   a reduction in the saving rate will have an ambiguous effect on (C / N) *.

Question 8

Graphically illustrate and explain the effects of a decrease in the saving rate on the Solow growth model.In your graph,clearly label all curves and equilibria.

Accepted Answer

The decrease in s will cause a reduction...

Question 9

Suppose the economy is initially in the steady state.A reduction in the depreciation rate (δ) will cause

Accepted Answer

A)  an increase in K / N.
B)  an increase in the growth rate in the long run.
C)  a reduction in C / N.
D)  all of the above

Question 10

For an economy in which there is no technological progress,explain what must occur for the steady state to occur.Also explain what this implies about the rate of growth of output,output per worker,and the capital stock.

Accepted Answer

The steady occurs when the economy is in...

Question 11

Suppose there is an increase in the saving rate.This increase in the saving rate must cause an increase in consumption per capita in the long run when

Accepted Answer

A)  capital per worker approaches the golden-rule level of capital per worker.
B)  the saving is used for education rather than physical capital.
C)  the rate of saving exceeds the rate of depreciation.
D)  there is no technological progress.
E)   technological progress depends on human capital.

Question 12

Suppose the saving rate is greater than the golden rule saving rate (sG).First,explain what must happen to the saving rate in order to increase steady state consumption.Second,what are the advantages and disadvantages of this policy to increase steady state consumption.

Accepted Answer

The saving rate must decrease.This will ...

Question 13

Our model of long-run economic growth suggests that

Accepted Answer

A)  the U.S. growth slowdown since 1950 has been caused largely by low saving in the U.S.
B)  a higher rate of saving in the U.S. cannot do much to increase the U.S. growth rate over the next two decades.
C)  saving in the U.S. has exceeded the golden-rule level.
D)  all of the above
E)   none of the above

Question 14

Which of the following statements is always true?

Accepted Answer

A)  Investment equals depreciation.
B)  Investment equals the capital stock minus depreciation.
C)  The capital stock is equal to investment minus depreciation.
D)  Any change in the capital stock is equal to investment minus depreciation.
E)   The increase in investment is equal to the capital stock minus depreciation.

Exam 11: Saving, capital Accumulation, and Output

Which of the following is not a flow variable?

Correct Answer
verified

Suppose the saving rate is greater than the golden rule saving rate (sG).First,explain what must happen to the saving rate in order to increase steady state consumption.Second,what are the advantages and disadvantages of this policy to increase steady state consumption.

Correct Answer
verified
The saving rate must decrease.This will ...
View Answer

Which of the following statements is always true?

Correct Answer
verified

The golden rule level of capital refers to

Correct Answer
verified

At the current steady state capital-labor ratio,assume that the steady state level of per capita consumption,(C / N) *,is greater than the golden rule level of steady state per capita consumption.Given this information,we can be certain that

Correct Answer
verified

Suppose the economy is initially in the steady state.A reduction in the depreciation rate (δ) will cause

Correct Answer
verified

Suppose there is an increase in the saving rate.This increase in the saving rate must cause an increase in consumption per capita in the long run when

Correct Answer
verified

At the current steady state capital-labor ratio,assume that the steady state level of per capita consumption,(C / N) *,is less than the golden rule level of steady state per capita consumption.Given this information,we can be certain that

Correct Answer
verified

Our model of long-run economic growth suggests that

Correct Answer
verified

Which of the following represents the effects in period t of an increase in the saving rate in period t?

Correct Answer
verified

Suppose an economy experiences a 5% increase in human capital.We know that this will cause

Correct Answer
verified

Graphically illustrate and explain the effects of a decrease in the saving rate on the Solow growth model.In your graph,clearly label all curves and equilibria.

Correct Answer
verified
The decrease in s will cause a reduction...
View Answer

For this question assume that technological progress does not occur.The rate of saving in Canada has generally been greater than the saving rate in the U.S.Given this information,we know that in the long run

Correct Answer
verified

For an economy in which there is no technological progress,explain what must occur for the steady state to occur.Also explain what this implies about the rate of growth of output,output per worker,and the capital stock.

Correct Answer
verified
The steady occurs when the economy is in...
View Answer

Exam 11: Saving, capital Accumulation, and Output

Which of the following is not a flow variable?

Correct AnswerverifiedShow Answer

Suppose the saving rate is greater than the golden rule saving rate (sG).First,explain what must happen to the saving rate in order to increase steady state consumption.Second,what are the advantages and disadvantages of this policy to increase steady state consumption.

Correct AnswerverifiedThe saving rate must decrease.This will ...View AnswerShow Answer

Which of the following statements is always true?

Correct AnswerverifiedShow Answer

The golden rule level of capital refers to

Correct AnswerverifiedShow Answer

At the current steady state capital-labor ratio,assume that the steady state level of per capita consumption,(C / N) *,is greater than the golden rule level of steady state per capita consumption.Given this information,we can be certain that

Correct AnswerverifiedShow Answer

Suppose the economy is initially in the steady state.A reduction in the depreciation rate (δ) will cause

Correct AnswerverifiedShow Answer

Suppose there is an increase in the saving rate.This increase in the saving rate must cause an increase in consumption per capita in the long run when

Correct AnswerverifiedShow Answer

At the current steady state capital-labor ratio,assume that the steady state level of per capita consumption,(C / N) *,is less than the golden rule level of steady state per capita consumption.Given this information,we can be certain that

Correct AnswerverifiedShow Answer

Our model of long-run economic growth suggests that

Correct AnswerverifiedShow Answer

Which of the following represents the effects in period t of an increase in the saving rate in period t?

Correct AnswerverifiedShow Answer

Suppose an economy experiences a 5% increase in human capital.We know that this will cause

Correct AnswerverifiedShow Answer

Graphically illustrate and explain the effects of a decrease in the saving rate on the Solow growth model.In your graph,clearly label all curves and equilibria.

Correct AnswerverifiedThe decrease in s will cause a reduction...View AnswerShow Answer

For this question assume that technological progress does not occur.The rate of saving in Canada has generally been greater than the saving rate in the U.S.Given this information,we know that in the long run

Correct AnswerverifiedShow Answer

For an economy in which there is no technological progress,explain what must occur for the steady state to occur.Also explain what this implies about the rate of growth of output,output per worker,and the capital stock.

Correct AnswerverifiedThe steady occurs when the economy is in...View AnswerShow Answer

Correct Answer
verified

Correct Answer
verified
The saving rate must decrease.This will ...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The decrease in s will cause a reduction...
View Answer

Correct Answer
verified

Correct Answer
verified
The steady occurs when the economy is in...
View Answer