Question 1

As an economy adjusts to an increase in the saving rate,we would expect output per worker

Accepted Answer

A)  to increase at a constant rate and continue increasing at that rate in the steady state.
B)  to increase at a permanently higher rate.
C)  to decrease at a permanently higher rate.
D)  to return to its original level.
E)   none of the above

Question 2

Which of the following are reasons to suspect spending on education might overestimate human capital investment?

Accepted Answer

A)  Education spending leaves out foregone wages.
B)  Part of total spending on education is really consumption.
C)  Much human capital investment comes from on-the-job training.
D)  all of the above
E)   none of the above

Question 3

Suppose the saving rate is initially greater than the golden rule saving rate.We know with certainty that an increase in the saving rate will cause

Accepted Answer

A)  an increase in the rate of growth in the long run.
B)  a reduction in output per worker.
C)  a reduction in consumption per worker.
D)  all of the above
E)   none of the above

Question 4

Suppose,due to the effects of a military conflict that has ended,that a country experiences a large reduction in its capital stock.Assume no other effects of this event on the economy.Which of the following will tend to occur as the economy adjusts to this situation?

Accepted Answer

A)  a relatively low growth rate for some time
B)  a relative high growth rate for some time
C)  zero growth for some time, followed by a gradually increasing growth rate
D)  positive growth, followed by negative growth, and then zero growth
E)   none of the above

Question 5

Graphically illustrate and explain the effects of a decrease in the rate of depreciation (δ)on the Solow growth model.In your graph,clearly label all curves and equilibria.

Accepted Answer

The depreciation line becomes flatter an...

Question 6

Suppose the following situation exists for an economy: Kt₊₁ / N < Kt / N.Given this information,we know that

Accepted Answer

A)  saving per worker equals depreciation per worker in period t.
B)  saving per worker is less than depreciation per worker in period t.
C)  saving per worker is greater than depreciation per worker in period t.
D)  the saving rate fell in period t.
E)   none of the above

Question 7

In the absence of technological progress,we know with certainty that an increase in the saving rate will cause which of the following?

Accepted Answer

A)  increase steady state consumption
B)  decrease steady state consumption
C)  have no effect on steady state consumption
D)  increase steady state consumption only if the increase in saving exceeds the increase in depreciation
E)   increase steady state consumption only if the increase in saving is less than the increase in depreciation

Question 8

In the absence of technological progress,an increase in the saving rate will cause which of the following?

Accepted Answer

A)  increase temporarily the growth of output per worker
B)  increase the steady state growth of output per worker
C)  decrease temporarily the growth of output per worker
D)  decrease the steady state growth of output per worker
E)   have an ambiguous effect on the growth of output per worker

Question 9

Suppose the following situation exists for an economy: Kt₊₁ / N > Kt / N.Given this information,we know that

Accepted Answer

A)  saving per worker equals depreciation per worker in period t.
B)  saving per worker is less than depreciation per worker in period t.
C)  saving per worker is greater than depreciation per worker in period t.
D)  the saving rate fell in period t.
E)   none of the above

Question 10

Graphically illustrate and explain the effects of an increase in the saving rate on the Solow growth model.In your graph,clearly label all curves and equilibria.

Accepted Answer

The graph is easy. The increase in s wil...

Question 11

Suppose the following situation exists for an economy: Kt₊₁ / N = Kt / N.Given this information,we know that

Accepted Answer

A)  saving per worker equals depreciation per worker in period t.
B)  saving per worker is less than depreciation per worker in period t.
C)  saving per worker is greater than depreciation per worker in period t.
D)  the saving rate fell in period t.
E)   steady state consumption is equal to the golden rule level of steady state consumption.

Question 12

Which of the following will likely cause an increase in output per worker?

Accepted Answer

A)  an increase in education expenditures
B)  an increase in the saving rate
C)  an increase in on-the-job training
D)  all of the above

Question 13

In the absence of technological progress,a decrease in the saving rate will cause which of the following?

Accepted Answer

A)  decrease temporarily the growth of output per worker
B)  decrease the steady state growth of output per worker
C)  increase temporarily the growth of output per worker
D)  increase the steady state growth of output per worker
E)   have an ambiguous effect on the growth of output per worker

Question 14

During the latter half of the 1990s,the U.S.saving rate decreased.Will this reduction in the saving rate have a permanent effect on the rate of growth of output per worker? Explain.

Accepted Answer

Changes in the saving rate can...

Question 15

The capital-labor ratio will tend to increase over time when

Accepted Answer

A)  investment per worker equals saving per worker.
B)  investment per worker exceeds saving per worker.
C)  investment per worker is less than depreciation per worker.
D)  saving per worker equals depreciation per worker.
E)   output per worker is less than capital per worker.

Question 16

In the absence of technological progress,we know that the level of output per worker in the steady state will

Accepted Answer

A)  increase over time.
B)  remain constant.
C)  decrease as a result of decreasing returns to scale.
D)  increase or decrease, depending on the rate of saving.
E)   increase or decrease, depending on the rate of depreciation.

Question 17

Explain the relationship among output,saving,and investment.

Accepted Answer

The level of output (per worker)will dep...

Question 18

In the absence of technological progress,which of the following is true when the economy is operating at the steady state?

Accepted Answer

A)  The growth of output per worker is zero.
B)  The growth of output per worker is equal to the saving rate.
C)  The growth of output per worker is equal to the rate of investment.
D)  The growth of output per worker is equal to the rate of depreciation.
E)   none of the above

Question 19

Explain the difference between fully funded social security system and pay-as-you-go social security system.

Accepted Answer

Fully funded social security system taxe...

Question 20

An increase in the saving rate will affect which of the following variables in the long run?

Accepted Answer

A)  output per worker
B)  capital per worker
C)  the level of investment
D)   all of the above

Exam 11: Saving, capital Accumulation, and Output

In the absence of technological progress,we know that the level of output per worker in the steady state will

Correct AnswerverifiedShow Answer

During the latter half of the 1990s,the U.S.saving rate decreased.Will this reduction in the saving rate have a permanent effect on the rate of growth of output per worker? Explain.

Correct AnswerverifiedChanges in the saving rate can...View AnswerShow Answer

Suppose the following situation exists for an economy: Kt₊₁ / N < Kt / N.Given this information,we know that

Correct AnswerverifiedShow Answer

The capital-labor ratio will tend to increase over time when

Correct AnswerverifiedShow Answer

Explain the difference between fully funded social security system and pay-as-you-go social security system.

Correct AnswerverifiedFully funded social security system taxe...View AnswerShow Answer

As an economy adjusts to an increase in the saving rate,we would expect output per worker

Correct AnswerverifiedShow Answer

Graphically illustrate and explain the effects of a decrease in the rate of depreciation (δ)on the Solow growth model.In your graph,clearly label all curves and equilibria.

Correct AnswerverifiedThe depreciation line becomes flatter an...View AnswerShow Answer

An increase in the saving rate will affect which of the following variables in the long run?

Correct AnswerverifiedShow Answer

Suppose the following situation exists for an economy: Kt₊₁ / N > Kt / N.Given this information,we know that

Correct AnswerverifiedShow Answer

Explain the relationship among output,saving,and investment.

Correct AnswerverifiedThe level of output (per worker)will dep...View AnswerShow Answer

Which of the following will likely cause an increase in output per worker?

Correct AnswerverifiedShow Answer

Graphically illustrate and explain the effects of an increase in the saving rate on the Solow growth model.In your graph,clearly label all curves and equilibria.

Correct AnswerverifiedThe graph is easy. The increase in s wil...View AnswerShow Answer

Suppose the following situation exists for an economy: Kt₊₁ / N = Kt / N.Given this information,we know that

Correct AnswerverifiedShow Answer

Which of the following are reasons to suspect spending on education might overestimate human capital investment?

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In the absence of technological progress,we know with certainty that an increase in the saving rate will cause which of the following?

Correct AnswerverifiedShow Answer

Suppose,due to the effects of a military conflict that has ended,that a country experiences a large reduction in its capital stock.Assume no other effects of this event on the economy.Which of the following will tend to occur as the economy adjusts to this situation?

Correct AnswerverifiedShow Answer

In the absence of technological progress,which of the following is true when the economy is operating at the steady state?

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In the absence of technological progress,a decrease in the saving rate will cause which of the following?

Correct AnswerverifiedShow Answer

Suppose the saving rate is initially greater than the golden rule saving rate.We know with certainty that an increase in the saving rate will cause

Correct AnswerverifiedShow Answer

In the absence of technological progress,an increase in the saving rate will cause which of the following?

Correct AnswerverifiedShow Answer

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Correct Answer
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Changes in the saving rate can...
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Correct Answer
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Correct Answer
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Correct Answer
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Fully funded social security system taxe...
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Correct Answer
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Correct Answer
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The depreciation line becomes flatter an...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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The level of output (per worker)will dep...
View Answer

Correct Answer
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Correct Answer
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The graph is easy. The increase in s wil...
View Answer

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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