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HW6 - Homework 6 for Intermediate Macroeconomics-Due on I...

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Homework 6 for Intermediate Macroeconomics-Due on 11/02/2010 I Multiple choices(Provide the explanation ) (30 points) 1. In this graph, when the capital-labor ratio is OA, AB represents: A) investment per worker, and AC represents consumption per worker. B) consumption per worker, and AC represents investment per worker. C) investment per worker, and BC represents consumption per worker. D) consumption per worker, and BC represents investment per worker. 2. The Solow model shows that a key determinant of the steady-state ratio of capital to labor is the: A) level of output. B) labor force. C) saving rate. D) capital elasticity in the production function. 3. Suppose an economy is initially in a steady state with capital per worker below the Golden Rule level. If the saving rate increases to a rate consistent with the Golden Rule, then in the transition to the new steady state, consumption per worker will:
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