Suppose individuals now believe that there will be a

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Chapter 20 / Exercise 3
Exploring Economics
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12. Suppose individuals now believe that there will be a future tax cut. This reduction in expected future taxes will cause which of the following to occur in the current period? a. the LM curve to shift down. b. the LM curve to shift up. c. the IS curve to shift rightward. d. the IS curve to shift leftward. e. none of the above.
13. Which of the following statements is true?
14. In the absence of technological progress, which of the following remains constant in the steady state equilibrium?
15. When steady state capital per worker is above the golden-rule level, we know with certainty that an increase in the saving rate will
16. In an economy with technological progress, which of the following is always true after an economy reaches a balanced growth equilibrium? a. the growth rate of output equals the rate of depreciation. b. population growth is zero. c. the growth rate of capital is equal to the growth rate of the effective work force. d. the growth rate of capital is equal to the savings rate. e. none of the above.
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Exploring Economics
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Chapter 20 / Exercise 3
Exploring Economics
Sexton
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417. Suppose there is an increase in the saving rate. This increase in the saving rate will cause an increase in which of the following once the economy reaches its new steady state equilibrium? a. growth rate of output. b. growth rate of capital. c. growth rate of capital per worker. d. all of the above. e. none of the above. 18. Assume that an economy experiences both positive population growth and technological progress. Once the economy has achieved balanced growth, we know that the capital per effective worker ratio (K/NA) is: a. growing at a rate of δ+ gA+ gN b. growing at a rate of gA+ gN c. growing at a rate of gN d. growing at a rate of gA e. none of the abovePART II: Short Answer[44 minutes total] 1. (8 minutes total) Suppose the yield on a two year discount bond is 6%, and the yield on a one year discount bond is 4%.

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