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Unformatted text preview: ease the capital growth rate in the long run B. increase the GDP growth rate in the short run; keep the capital growth rate unchanged in the long run C. decrease the GDP growth rate in the short run; increase capital growth rate in the long run D. decrease the GDP growth rate in the short run; keep the capital growth rate unchanged in the long run 1 4. If the economy has reached steady state, the level of consumption per person in this economy A. could be increased by increasing capital stock above steady state value B. could be increased by reducing capital stock below steady state value C. Is maximized exactly at the steady state value of capital D. More information is required to determine if consumption is at a maximum 5. During the financial crisis of 2007, the risk and uncertainty surged in the market, which led to a large positive risk premium and big recession. In this case, within the analysis of IS/MP, the central bank A. Should increase interest rate to boost economy B. Should decrease interest rate to curb t...
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- Fall '08