Problem+Set+_2+_Fall+2011_ - Name: _ SID : _ GSI: _ Econ...

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Name: ____________________________ SID : ____________________________ GSI: ____________________________ Econ 100B Macroeconomic Analysis Professor Steven Wood Fall 2011 Problem Set #2 Due: September 27, 2011 (in class before 3:50:01 p.m.) Place your completed problem set in the box near the entrance. Please sign the following oath: The answers on this problem set are entirely my own work. I neither copied from the work of others nor allowed others to copy from my work. _______________________________________ Signature Any problem set turned in without a signature will be assigned a grade of zero. Problem Set Instructions 1. You MUST complete your problem set on this template. 2. Graphs and equations MAY be drawn by hand. When drawing diagrams, clearly and accurately label all axis, lines, curves, and equilibrium points. 3. Explanations MUST be word-processed. Your explanations should be succinct and to the point. Problem Set #2 (Fall 2011) 1/5
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A. Multiple Choice Questions (15 points) . Circle the letter corresponding to the best answer. (3 points each.) 1. Suppose that total factor productivity is constant, the capital stock is growing at 1% per year, and the output elasticity with respect to capital is 0.4. How fast will the economy be growing when it is at its steady state? a. 0.4% b. 0.6% c. 1.0% d. 1.4% e. Indeterminate. 2. Low-income countries tend to have faster labor force growth rates than high-income countries. Compared to a situation where the labor force growth rates were identical there would now be: a. Higher saving rates in high-income countries than in low-income countries. b. Greater income differences between high-income and low-income countries. c. Smaller income differences between high-income and low-income countries. d. Lower depreciation rates in high-income countries than in low-income countries. 3. In microeconomic theory the real wage rate is positively related to the amount of capital each worker has to work with. Given this, what happens to the real wage rate in an economy described by the Solow Growth Model if an earthquake destroys half of the capital stock?
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This note was uploaded on 01/19/2012 for the course ECON 100B taught by Professor Wood during the Fall '08 term at University of California, Berkeley.

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Problem+Set+_2+_Fall+2011_ - Name: _ SID : _ GSI: _ Econ...

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