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practice midterm - to double 3 As the Solow model predicts...

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Econ 114 Javier Birchenall Practice questions Name: ____________________________ Perm #: ______ Consider the statement of each question and determine whether it is “true”, “false” or “uncertain”. No credit will be given without justi fi cation, try to answer all questions since partial credit will be granted. Carefully labeled graphs may help your explanation. If the statement is false, you may want to correct it. Good luck! 1. Large and positive growth in income per-capita has been the norm in human history and current income di ff erences simply re fl ect past di ff erences. 2. Doubling the growth rate of income per-capita reduces in more than half the time it takes for income
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Unformatted text preview: to double. 3. As the Solow model predicts, devoting a larger share of income to investment in the US would help restore the rapid productivity growth characteristic of the 1950s and 1960s. 4. Assume that the production in the economy is carried out with a production function given by Y = K β L α . Then, the economy will experience increasing returns if and only if α + β > 1 . 5. During the demographic transition, population growth increased because fertility declined faster than mortality. 1...
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