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Unformatted text preview: Economics 102, Winter, 2010 Midterm Exam # 2 practice questions Professor Lee Ohanian (1) Show that in the Solow model in which population grows at rate n, that the Golden Rule requires that the marginal product of capital be equal to the sum of the depreciation rate and the grwoth rate of the population. Why is the golden rule MPK higher for a higher population growth rate? (2) Show that in the Solow model in which there is constant growth in worker e¢ ciency that a steady state exists for the variable Y= ( NE ) ; and that once the steady state is reached that per capita output grows at rate g: (3) What policy advise should economists give to poor countrys that are hoping to increase their living standards? (4) What are the main functions of money? (5) Why is it a challenge for economists to explain why &at money has value? (6) Use the quantity theory to show how the in¡ation rate moves proportion- ally to the growth rate of the money supply. Does the evidence, as presented in Mankiw, support the quantity theory£s predictions?Mankiw, support the quantity theory£s predictions?...
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This note was uploaded on 03/06/2010 for the course ECON 102 taught by Professor Serra during the Spring '08 term at UCLA.
- Spring '08