ec_Chapter 7 - Chapter 7 1. In the Solow growth model of...

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Chapter 7 1. In the Solow growth model of Chapter 7, the demand for goods equals investment: A) minus depreciation. B) plus saving. C) plus consumption. D) plus depreciation. 2. In the steady state, the capital stock does not change because investment equals: A) output per worker. B) the marginal product of capital. C) depreciation. D) consumption. 3. In the Solow growth model of Chapter 7, where s is the saving rate, y is output per worker, and i is investment per worker, consumption per worker ( c ) equals: A) sy B) (1 – s ) y C) (1 + s ) y D) (1 – s ) y i 4. If the per-worker production function is given by y = k 1/2, the saving rate ( s ) is 0.2, and the depreciation rate is 0.1, then the steady-state ratio of capital to labor is: A) 1. B) 2. C) 4. D) 9. 5. Starting from a steady-state situation, if the saving rate increases, the rate of growth of capital per worker will: A) increase and continue to increase unabated. B) increase until the new steady state is reached. C) decrease until the new steady state is reached. D) decrease and continue to decrease unabated. Page 1 6. Assume two economies are identical in every way except that one has a higher saving rate. ______ According to the Solow growth model, in the steady state the country with the higher saving rate will have ______ level of total output and ______ rate of growth of output per worker as/than the country with the lower saving rate. A) the same; the same B) the same; a higher C) a higher; the same D) a higher; a higher 7. The formula for steady-state consumption per worker ( c *) as a function of output per worker and investment per worker is: A)
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This note was uploaded on 11/28/2010 for the course ECO 2013 taught by Professor Patconroy during the Summer '08 term at Miami Dade College, Miami.

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ec_Chapter 7 - Chapter 7 1. In the Solow growth model of...

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