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f01_ps9 - 14.02 Principles of Macroeconomics Problem Set 9...

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14.02 Principles of Macroeconomics Problem Set 9 - GROWTH Posted: Wednesday, November 28, 2001 Due: Monday, December 10, 2001 PART I (TRUE or FALSE) 1. Under a fi xed exchange rate regime, aggregate demand is vertical because any change in P will be o ff set by an endogenous movement of M. 2. Under a fl exible exchange rate regime, an increase in E e will shift aggregate demand to the left. 3. Under a fi xed exchange rate regime, an increase in E e will shift aggregate demand to the right. 4. As long as productivity does not a ff ect the bargaining process between workers and fi rms, technological progress will not a ff ect the natural rate of unemploy- ment. 5. The Solow model with no technological progress concludes that output per capita will converge to a level that does not depend on s (savings rate). 6. Conditional convergence states that, everything else equal, the absolute in- crease of output per capita in small countries will be larger than in rich coun- tries.
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