econ 410 hw3

econ 410 hw3 - Homework 3 Spring 2011 ECON 410...

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Homework 3 Spring 2011 ECON 410 Professor Li Gan Macroeconomic Theory Due 3/24 in class (A) Multiple Choice Questions: (3 points per multiple choice problem) 25 questions 1. In the Solow growth model, if investment exceeds depreciation, the capital stock will ______ and output will ______ until the steady state is attained. A) increase; increase B) increase; decrease C) decrease; decrease D) decrease; increase 2. With a per-worker production function y = k 1/2 , the steady-state capital stock per worker ( k * ) as a function of the saving rate ( s ) is given by: A) k * = ( s / δ ) 2 . B) k * = ( δ / σ ) 2 . C) k * = s / δ . D) k * = δ / s . 3. If an economy with no population growth or technological change has a steady-state MPK of 0.125, a depreciation rate of 0.1, and a saving rate of 0.225, then the steady-state capital stock: A) is greater than the Golden Rule level. B) is less than the Golden Rule level. C) equals the Golden Rule level. D) could be either above or below the Golden Rule level. 4. According to the Solow model, persistently rising living standards can only be explained by: A) population growth. B) capital accumulation. C) saving rates. D) technological progress. 5. Data from states within United States suggest that economies of states will converge to: A) the same steady state. B) their own steady state. C) The Golden Rule steady state. D) Steady states that are higher than Golden Rule level. Page 1
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6. Data from both rich countries and poor countries suggest that economies of countries with different steady states will converge to: A) the same steady state. B) their own steady state. C) the Golden Rule steady state. D) steady states below the Golden Rule level. 7. In the Solow model with technological progress, by increasing the efficiency of labor at rate g : A) the real wage and the real rental price of capital both grow at rate g . B) the real wage grows at rate g but the real rental price of capital is constant. C) the real wage is constant but the real rental price of capital grows at rate g . D) both the real wage and the real rental price of capital are constant. 8. According to the Solow model, which of the following variables are exogenous? A) k and y . B) L , δ and g . C)
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This note was uploaded on 02/13/2012 for the course ECON 410 taught by Professor Hernandez-verme during the Spring '08 term at Texas A&M.

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econ 410 hw3 - Homework 3 Spring 2011 ECON 410...

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