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Spring 2007 (Solow Growth Model) Econ 100B 1 of 8 Name: _______ ANSWERS ___________ SID : ____________________________ Discussion Section: ________________ Economic 100B Macroeconomic Analysis Professor Steven Wood Spring 2007 Exam #1 ANSWERS Please sign the following oath: The answers on this test are entirely my own work. I neither gave nor received any aid while taking this test. I will not discuss the questions on this test until after 3:30 p.m. on February 15, 2007. ______________________ Signature Any test turned in without a signature indicating that you have taken this oath will be assigned a grade of zero. Graph Instructions When drawing diagrams, the following rules apply: a. Completely , clearly and accurately label all axis, lines, curves, and equilibrium points. b. The original diagram and equilibrium points MUST be drawn in black or pencil. c. The first shift of any line(s) and the new equilibrium points MUST be drawn in red. d. The second shift of any line(s) and new equilibrium points MUST be drawn in blue e. The third shift of any line(s) and new equilibrium points MUST be drawn in green. Do NOT open this test until instructed to do so. Good Luck!

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Spring 2007 (Solow Growth Model) Econ 100B 3 of 8 A. Multiple Choice Questions . Mark the letter corresponding to the best answer in the corresponding space at the bottom of the page. (3 points each; total of 30 points.) 1. Robert Fogel, a Nobel Laureate, has argued that better health or a higher level of nutrition of workers is important in generating higher standards of living. In the Solow model, we would represent such a change as: a. A one time rise in N because this effectively leads to more workers. b. A rise in labor force growth, n-dot. c. A rise in technology, A. d. Slower rates of decreasing returns to capital accumulation because workers are healthier. e. Higher depreciation rates, δ , because there are now more people working. 2. According to the Solow model, all of these statements about the steady state standard of living are true EXCEPT:

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