Question 1

Solow Diagram
 
-On the Solow Diagram, an increase in productivity is shown by

Accepted Answer

A)   an upward shift of the depreciation plus capital dilution line
B)   an upward shift of the investment function
C)   a downward shift of the depreciation plus capital dilution line
D)   a downward shift of the investment functionE) A) and C)
F) B) and D)

Question 2

If depreciation is equal to investment ________.

Accepted Answer

A)   capital per-worker rises over time.
B)   capital per-worker is stable.
C)   captial per-worker falls over time.
D)   capital per worker equals savingE) A) and C)
F) None of the above

Question 3

The Solow model suggests that economies with the same aggregate production function, ratio of workers to the total population and saving rates will ________.

Accepted Answer

A)   trade with one another.
B)   start with different initial levels of per capita income.
C)   possess the same rate of depreciation.
D)   experience convergence.E) None of the above
F) A) and C)

Question 4

If an economy initially starts away from the steady state ________.

Accepted Answer

A)   output will gradually fall over time.
B)   the economy will converge to the steady state in the long-run.
C)   consumption spending must be greater than investment spending.
D)   consumption spending must rise.E) B) and D)
F) C) and D)

Question 5

In the Solow model, the faster growth of output that results from an increase in the saving rate is temporary, because ________.

Accepted Answer

A)   of diminishing marginal product of capital
B)   with a larger stock of capital, consumption is encouraged more than investment
C)   the rising capital stock depreciates at a faster rate
D)   the economy settles into a steady state in which saving no longer risesE) All of the above
F) None of the above

Question 6

Across national economies which of the following is the most important source of variation in growth rates?

Accepted Answer

A)   labor growth.
B)   capital growth.
C)   productivity growth.
D)   government regulation.E) A) and D)
F) None of the above

Question 7

In the bathtub analogy, which of the following is a stock variable?

Accepted Answer

A)   the amount of investment.
B)   the rate of depreciation.
C)   the amount of capital-per worker.
D)   the Cobb-Douglass value.E) All of the above
F) A) and B)

Question 8

Population growth is similar to depreciation, in that ________.

Accepted Answer

A)   each lowers the capital-labor ratio
B)   each tends to encourage saving
C)   capital wears out faster when used by more workers
D)   each helps to explain how economies can sustain a positive growth rate of outputE) None of the above
F) C) and D) A

Question 9

Comparing steady states, which of the following is a result of a permanent increase in the saving rate, but is not a consequence of a one-time increase in productivity?

Accepted Answer

A)   an increase in consumption per worker
B)   a decrease in the marginal product of capital
C)   an increase in output per worker
D)   an increase in the growth rate of outputE) All of the above
F) B) and D)

Question 10

The Solow model is ________.

Accepted Answer

A)   the basic model of how technology changes over time
B)   the foundation for the classical economic thought of Adam Smith.
C)   one of the dominant explanations of the business cycle.
D)   based on the notion of diminishing marginal product of capital and laborE) All of the above
F) A) and D)

Question 11

Output per worker yt = 4kt1/3, the saving rate is 30 percent, and the depreciation rate is 0.133. Calculate the steady-state values of capital per worker and consumption per worker.

Accepted Answer

The steady-state capital-labor ratio k* =  = 27. Consumption per worker is (1 - s) ∗ 4∗271/3 = 8.4.

Question 12

Output growth in the United States in the period 1996 to 2008 averaged three percent per year. Though this was an improvement on the 2.9% average annual growth of output over the preceding 20 years, an increase of one-tenth of a percentage point seems hardly to justify the popularity of the label "new economy." Comment.

Accepted Answer

Output growth is the result of growth of...

Question 13

The growth rate of which of the following is not a component of the growth accounting equation?

Accepted Answer

A)   the capital stock.
B)   labor.
C)   depreciation.
D)   available technology.E) All of the above
F) B) and D)

Question 14

In a steady-state economy with no population growth, output per worker is 35, the saving rate is 20 percent, and the depreciation rate is 11 percent. The level of capital per worker is ________.

Accepted Answer

A)   64
B)   19
C)   39
D)   28E) C) and D)
F) A) and B)

Question 15

In the Solow model, which of the following is an exogenous variable?

Accepted Answer

A)   productivity
B)   the capital-labor ratio
C)   consumption per worker
D)   investment per workerE) None of the above
F) C) and D)

Question 16

If productivity growth equals 3.0 percent, the contribution from capital growth 1.2 percent and the contribution from labor growth 2.0 percent, then output growth must equal ________.

Accepted Answer

A)   2.2 percent.
B)   4.2 percent.
C)   6.2 percent.
D)   7.2 percent.E) B) and D)
F) All of the above

Question 17

Solow Diagram
 
-On the diagram above, show the new steady-state capital-labor ratio that results from a decrease in the saving rate. Can you say what has happened to the equilibrium level of consumption per worker?

Accepted Answer

As saving/investment falls, the equilibr...

Question 18

An increase in the saving rate results in a higher steady state ________.

Accepted Answer

A)   growth rate of capital
B)   growth rate of output per worker
C)   level of consumption per worker
D)   level of capital per workerE) None of the above
F) C) and D)

Question 19

If investment per-worker equals some value X, and depreciation per-worker equals some value Z, then the change in the capital stock per-worker is equal to ________.

Accepted Answer

A)   X+Z.
B)   X-Z.
C)   X times Z.
D)   X divided by Z.E) All of the above
F) B) and C) B

Question 20

The Solow model implies that continuous growth in productivity at a rate of one percent will result in continuous growth of output per worker at a rate of 1.43%. Thus, if at a point in time output per worker is 270 and productivity rises by one percent, the resulting level of output per worker is

Accepted Answer

A)   386
B)   273
C)   274
D)   277E) C) and D)
F) B) and C)

Exam 6: The Sources of Growth and the Solow Model

Solow Diagram -On the Solow Diagram, an increase in productivity is shown by

Correct Answer
verified

If depreciation is equal to investment ________.

Correct Answer
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The Solow model suggests that economies with the same aggregate production function, ratio of workers to the total population and saving rates will ________.

Correct Answer
verified

If an economy initially starts away from the steady state ________.

Correct Answer
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In the Solow model, the faster growth of output that results from an increase in the saving rate is temporary, because ________.

Correct Answer
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Across national economies which of the following is the most important source of variation in growth rates?

Correct Answer
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In the bathtub analogy, which of the following is a stock variable?

Correct Answer
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Population growth is similar to depreciation, in that ________.

Correct Answer
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A

Comparing steady states, which of the following is a result of a permanent increase in the saving rate, but is not a consequence of a one-time increase in productivity?

Correct Answer
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The Solow model is ________.

Correct Answer
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Output per worker yt = 4kt1/3, the saving rate is 30 percent, and the depreciation rate is 0.133. Calculate the steady-state values of capital per worker and consumption per worker.

Correct Answer
verified
The steady-state capital-labor ratio k* = 11eab3ba_7089_cf7a_a5fb_db118af8575f_TB5034_11 = 27. Consumption per worker is (1 - s) ∗ 4∗271/3 = 8.4.

Correct Answer
verified
Output growth is the result of growth of...
View Answer

The growth rate of which of the following is not a component of the growth accounting equation?

Correct Answer
verified

In a steady-state economy with no population growth, output per worker is 35, the saving rate is 20 percent, and the depreciation rate is 11 percent. The level of capital per worker is ________.

Correct Answer
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In the Solow model, which of the following is an exogenous variable?

Correct Answer
verified

If productivity growth equals 3.0 percent, the contribution from capital growth 1.2 percent and the contribution from labor growth 2.0 percent, then output growth must equal ________.

Correct Answer
verified

Solow Diagram -On the diagram above, show the new steady-state capital-labor ratio that results from a decrease in the saving rate. Can you say what has happened to the equilibrium level of consumption per worker?

Correct Answer
verified
As saving/investment falls, the equilibr...
View Answer

An increase in the saving rate results in a higher steady state ________.

Correct Answer
verified

If investment per-worker equals some value X, and depreciation per-worker equals some value Z, then the change in the capital stock per-worker is equal to ________.

Correct Answer
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B

The Solow model implies that continuous growth in productivity at a rate of one percent will result in continuous growth of output per worker at a rate of 1.43%. Thus, if at a point in time output per worker is 270 and productivity rises by one percent, the resulting level of output per worker is

Correct Answer
verified

Exam 6: The Sources of Growth and the Solow Model

Solow Diagram -On the Solow Diagram, an increase in productivity is shown by

Correct AnswerverifiedShow Answer

If depreciation is equal to investment ________.

Correct AnswerverifiedShow Answer

The Solow model suggests that economies with the same aggregate production function, ratio of workers to the total population and saving rates will ________.

Correct AnswerverifiedShow Answer

If an economy initially starts away from the steady state ________.

Correct AnswerverifiedShow Answer

In the Solow model, the faster growth of output that results from an increase in the saving rate is temporary, because ________.

Correct AnswerverifiedShow Answer

Across national economies which of the following is the most important source of variation in growth rates?

Correct AnswerverifiedShow Answer

In the bathtub analogy, which of the following is a stock variable?

Correct AnswerverifiedShow Answer

Population growth is similar to depreciation, in that ________.

Correct AnswerverifiedA

Comparing steady states, which of the following is a result of a permanent increase in the saving rate, but is not a consequence of a one-time increase in productivity?

Correct AnswerverifiedShow Answer

The Solow model is ________.

Correct AnswerverifiedShow Answer

Output per worker yt = 4kt1/3, the saving rate is 30 percent, and the depreciation rate is 0.133. Calculate the steady-state values of capital per worker and consumption per worker.

Correct AnswerverifiedThe steady-state capital-labor ratio k* = 11eab3ba_7089_cf7a_a5fb_db118af8575f_TB5034_11 = 27. Consumption per worker is (1 - s) ∗ 4∗271/3 = 8.4.

Correct AnswerverifiedOutput growth is the result of growth of...View AnswerShow Answer

The growth rate of which of the following is not a component of the growth accounting equation?

Correct AnswerverifiedShow Answer

In a steady-state economy with no population growth, output per worker is 35, the saving rate is 20 percent, and the depreciation rate is 11 percent. The level of capital per worker is ________.

Correct AnswerverifiedShow Answer

In the Solow model, which of the following is an exogenous variable?

Correct AnswerverifiedShow Answer

If productivity growth equals 3.0 percent, the contribution from capital growth 1.2 percent and the contribution from labor growth 2.0 percent, then output growth must equal ________.

Correct AnswerverifiedShow Answer

Solow Diagram -On the diagram above, show the new steady-state capital-labor ratio that results from a decrease in the saving rate. Can you say what has happened to the equilibrium level of consumption per worker?

Correct AnswerverifiedAs saving/investment falls, the equilibr...View AnswerShow Answer

An increase in the saving rate results in a higher steady state ________.

Correct AnswerverifiedShow Answer

If investment per-worker equals some value X, and depreciation per-worker equals some value Z, then the change in the capital stock per-worker is equal to ________.

Correct AnswerverifiedB

The Solow model implies that continuous growth in productivity at a rate of one percent will result in continuous growth of output per worker at a rate of 1.43%. Thus, if at a point in time output per worker is 270 and productivity rises by one percent, the resulting level of output per worker is

Correct AnswerverifiedShow Answer

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A

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The steady-state capital-labor ratio k* = 11eab3ba_7089_cf7a_a5fb_db118af8575f_TB5034_11 = 27. Consumption per worker is (1 - s) ∗ 4∗271/3 = 8.4.

Correct Answer
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Output growth is the result of growth of...
View Answer

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As saving/investment falls, the equilibr...
View Answer

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B

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