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 perworker production function
y
=
k
1/2
, the steadystate capital stock per
worker (
k
*
) as a function of the saving rate (
s
) is given by:
3. If an economy with no population growth or technological change has a steadystate
MPK
of 0.125, a depreciation rate of 0.1, and a saving rate of 0.225, then the
steadystate capital stock:
4. According to the Solow model, persistently rising living standards can only be
explained by:
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
This preview has intentionally blurred sections. Sign up to view the full version.
View Full Document
6. Data from both rich countries and poor countries suggest that economies of countries
with different steady states will converge to:
7. In the Solow model with technological progress, by increasing the efficiency of labor
at rate
g
:
This is the end of the preview.
Sign up
to
access the rest of the document.
 Spring '08
 HERNANDEZVERME
 Economics, Steady State

Click to edit the document details