Question 1

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 2

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.

Question 3

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 4

Which of the following will likely cause a reduction in output per worker?

Accepted Answer

A)  a reduction in education expenditures
B)  a reduction in the saving rate
C)  a reduction in on-the-job training
D)  all of the above

Question 5

In the absence of technological progress,which of the following is true when the economy is operating at the steady state?

Accepted Answer

A)  the growth of output per worker is zero.
B)  the growth of output per worker is equal to the saving rate.
C)  the growth of output per worker is equal to the rate of investment.
D)  the growth of output per worker is equal to the rate of depreciation.
E)  none of the above

Question 6

If the saving rate is 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 7

Suppose policy makers wish to increase steady state consumption per worker.Explain what must happen to the saving rate to achieve this objective.

Accepted Answer

it depends! Whether the saving rate must...

Question 8

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 capit...

Question 9

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 10

Suppose an economy experience a 4% increase in each of the following variables: N,K,and H (human capital) .Given this information,we know with certainty that

Accepted Answer

A)  Y will increase by more than 4%.
B)  Y will increase by exactly 4%.
C)  Y will increase by less than 4%.
D)  Y will increase by less than 12% but by more than 4%.
E)  none of the above

Question 11

In the absence of technological progress,we know with certainty that an increase in the saving rate will cause which of the following?

Accepted Answer

A)  increase steady state consumption
B)  decrease steady state consumption
C)  have no effect on steady state consumption
D)  increase steady state consumption only if the increase in saving exceeds the increase in depreciation
E)  increase steady state consumption only if the increase in saving is less than the increase in depreciation

Question 12

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 13

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 14

In the absence of technological progress,which of the following remains constant in the steady state equilibrium?

Accepted Answer

A)  investment per worker
B)  output per worker
C)  saving per worker
D)  all of the above
E)  only A and B

Question 15

When the economy is in the steady state,we know with certainty that

Accepted Answer

A)  investment per worker is equal to depreciation per worker.
B)  consumption per worker is maximized.
C)  output per worker is maximized.
D)  the growth rate is maximized.
E)  all of the above

Question 16

An increase 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 17

Suppose two countries are identical in every way with the following exception.Economy A has a greater quantity of human capital 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

Question 18

Suppose there are two countries that are identical in every way with the following exception: Country A has a higher saving rate 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)  the level of consumption per worker will be higher in A.
D)  the level of consumption per worker will be higher in B.

Question 19

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 20

In the absence of technological progress,an increase in the saving rate will cause which of the following?

Accepted Answer

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

Exam 11: Saving,capital Accumulation,and Output

Suppose policy makers wish to increase steady state consumption per worker.Explain what must happen to the saving rate to achieve this objective.

Correct Answerverifiedit depends! Whether the saving rate must...View AnswerShow Answer

Which of the following statements is always true?

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

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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

An increase in the saving rate will NOT affect which of the following variables in the long run?

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

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

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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

In the absence of technological progress,we know with certainty that an increase in the saving rate will cause which of the following?

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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

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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.

Correct AnswerverifiedThe equation for the change in the capit...View AnswerShow Answer

In the absence of technological progress,an increase in the saving rate will cause which of the following?

Correct AnswerverifiedShow Answer

Suppose two countries are identical in every way with the following exception.Economy A has a greater quantity of human capital than economy B.Given this information,we know with certainty that

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If the saving rate is 1 ,we know that

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Which of the following will likely cause a reduction in output per worker?

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In the absence of technological progress,which of the following remains constant in the steady state equilibrium?

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In the absence of technological progress,which of the following is true when the economy is operating at the steady state?

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When the economy is in the steady state,we know with certainty that

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 an economy experience a 4% increase in each of the following variables: N,K,and H (human capital) .Given this information,we know with certainty that

Correct AnswerverifiedShow Answer

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it depends! Whether the saving rate must...
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Human capital represents the set of skil...
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The equation for the change in the capit...
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Correct Answer
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