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Discussion+Section+Problems%2C+Lecture+_8+ANSWERS_1_

Discussion+Section+Problems%2C+Lecture+_8+ANSWERS_1_ - Econ...

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1/3 Econ 100B Macroeconomic Analysis Professor Steven Wood Discussion Section Problems from Lecture #8 A. Multiple Choice Questions . Circle the letter corresponding to the best answer. 1. In the long-run, the Solow growth model demonstrates that in the absence of productivity growth: a. Per-worker income will decline. b. The economy will stop growing. c. The economy will reach a steady state with no per-worker income growth. d. The economy will grow at the sum of the depreciation rate and the labor force growth rate. 2. Suppose the economy is initially at its steady state and an earthquake then destroys 20% of the capital stock. How would you expect this to affect income-per-worker in the long run (compared to its pre- earthquake steady state)? 3. For an economy initially at its steady-state, an increase in government purchases would:
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