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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: 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: 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
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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: 7. In the Solow model with technological progress, by increasing the efficiency of labor at rate g :
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