Question 1

If endogenous growth models are correct,a lower rate of growth in the long run could occur as a result of which of the following?

Accepted Answer

A)  a lower rate of saving
B)  a lower rate of depreciation
C)  a redefinition of depreciation
D)  a redefinition of the steady state
E)  none of the above

Question 2

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)  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)  the saving rate fell in period t.
E)  steady state consumption is equal to the golden rule level of steady state consumption. A

Question 3

Which of the following are reasons to suspect spending on education might overestimate human capital investment?

Accepted Answer

A)  education spending leaves out foregone wages.
B)  part of total spending on education is really consumption.
C)  much human capital investment comes from on-the-job training.
D)  all of the above
E)  none of the above

Question 4

Suppose there is an increase in the saving rate.Explain what effect this will have on output,output per worker,the rate of growth of output,and the rate of growth of output per worker.

Accepted Answer

The increase in s will cause an increase...

Question 5

Explain the relationship among output,saving,and investment.

Accepted Answer

The level of output (per worker)will dep...

Question 6

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 7

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 cause an initial increase in consumption per worker.As the economy responds to this reduction in s,K / N and Y / N will fall.In fact,C / N will rise (as long as the drop in s does not go past the golden rule rate)as well and eventually exceed its initial level.The advantage of such a policy is that it will increase C / N initially and in the long run (given the previous qualifier).The are few if any disadvantages.It is possible to cut s too much (this has not been discussed here).

Question 8

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

Accepted Answer

A)  a reduction in K / N.
B)  a reduction in Y / N.
C)  a reduction in C / N.
D)  all of the above
E)  none of the above

Question 9

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

Question 10

In the absence of technological progress,a decrease in the saving rate will cause which of the following?

Accepted Answer

A)  decrease temporarily the growth of output per worker
B)  decrease the steady state growth of output per worker
C)  increase temporarily the growth of output per worker
D)  increase the steady state growth of output per worker
E)  have an ambiguous effect on the growth of output per worker

Question 11

Suppose depreciation per worker is less than saving per worker.Given this situation,explain what will happen to each of the following variables over time: capital per worker,output per worker,saving per worker,and consumption per worker.

Accepted Answer

If depreciation is less than saving,it i...

Question 12

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 13

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)  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)  the saving rate fell in period t.
E)  none of the above

Question 14

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

Accepted Answer

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

Question 15

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 16

Suppose two countries are identical in every way with the following exception.Economy A has a higher saving rate 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 E

Question 17

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 18

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 19

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 20

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

Exam 11: Saving,capital Accumulation,and Output

If endogenous growth models are correct,a lower rate of growth in the long run could occur as a result of which of the following?

Correct Answer
verified

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

Correct Answer
verified
A

Which of the following are reasons to suspect spending on education might overestimate human capital investment?

Correct Answer
verified

Suppose there is an increase in the saving rate.Explain what effect this will have on output,output per worker,the rate of growth of output,and the rate of growth of output per worker.

Correct Answer
verified
The increase in s will cause an increase...
View Answer

Explain the relationship among output,saving,and investment.

Correct Answer
verified
The level of output (per worker)will dep...
View 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 Answer
verified
In general,output per worker will depend...
View 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.

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

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

In the absence of technological progress,a decrease in the saving rate will cause which of the following?

Correct Answer
verified

Suppose depreciation per worker is less than saving per worker.Given this situation,explain what will happen to each of the following variables over time: capital per worker,output per worker,saving per worker,and consumption per worker.

Correct Answer
verified
If depreciation is less than saving,it i...
View Answer

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

Correct Answer
verified

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

Correct Answer
verified

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

Correct Answer
verified

Our model of long-run economic growth suggests that

Correct Answer
verified

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

Correct Answer
verified
E

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

Correct Answer
verified

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

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

The golden rule level of capital refers to

Correct Answer
verified

Exam 11: Saving,capital Accumulation,and Output

If endogenous growth models are correct,a lower rate of growth in the long run could occur as a result of which of the following?

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedA

Which of the following are reasons to suspect spending on education might overestimate human capital investment?

Correct AnswerverifiedShow Answer

Suppose there is an increase in the saving rate.Explain what effect this will have on output,output per worker,the rate of growth of output,and the rate of growth of output per worker.

Correct AnswerverifiedThe increase in s will cause an increase...View AnswerShow Answer

Explain the relationship among output,saving,and investment.

Correct AnswerverifiedThe level of output (per worker)will dep...View AnswerShow 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

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.

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

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 AnswerverifiedShow Answer

In the absence of technological progress,a decrease in the saving rate will cause which of the following?

Correct AnswerverifiedShow Answer

Suppose depreciation per worker is less than saving per worker.Given this situation,explain what will happen to each of the following variables over time: capital per worker,output per worker,saving per worker,and consumption per worker.

Correct AnswerverifiedIf depreciation is less than saving,it i...View AnswerShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedShow Answer

Our model of long-run economic growth suggests that

Correct AnswerverifiedShow Answer

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

Correct AnswerverifiedE

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

Correct AnswerverifiedShow Answer

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

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

The golden rule level of capital refers to

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified
A

Correct Answer
verified

Correct Answer
verified
The increase in s will cause an increase...
View Answer

Correct Answer
verified
The level of output (per worker)will dep...
View Answer

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

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
If depreciation is less than saving,it i...
View Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
E

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified