ECO 305 EXAM 2 WITH COMPLETE SOLUTIONS 100% VERIFIED!!
The Solow growth model describes:
A. how output is determined at a point in time.
B. how output is determined with fixed amounts of capital and labor.
C. how saving, population growth, and technological change affect output over time.
D. the static allocation, production, and distribution of the economy's output. -
ANSWER C
In this graph, when the capital-labor ratio is OA, AB represents:
A. investment per worker, and AC represents consumption per wAorker.
B. consumption per worker, and AC represents investment per worker.
C. investment per worker, and BC represents consumption per worker.
D. consumption per worker, and BC represents investment per worker - ANSWER A
The steady-state level of capital occurs when the change in the capital stock (k) equals:
A. 0
B. the saving rate.
C. the depreciation rate.
D. the population growth rate. - ANSWER C
In this graph, capital-labor ratio k2 is not the steady-state capital-labor ratio because:
A. the saving rate is too high.
B. the investment ratio is too high.
C. gross investment is greater than depreciation.
D. depreciation is greater than gross investment. - ANSWER A
, In the Solow growth model, if investment is less than 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 - ANSWER C
In the Solow growth model of an economy with no population growth and no
technological progress, the higher the steady capital-per-worker ratio, the higher the
steady-state:
A. growth rate of total output.
B. level of total output.
C. growth rate of output per worker.
D. level of output per worker. - ANSWER D
If the per-worker production function is given by y = k1/2, the saving rate (s) is 0.2, and
the depreciation rate is 0.1, then the steady-state ratio of capital to labor is:
A. 1
B. 2
C. 4
D. 9 - ANSWER C
If the national saving rate increases, the:
A. economy will grow at a faster rate forever.
B. capital-labor ratio will increase forever.
C. economy will grow at a faster rate until a new, higher, steady-state capital-labor ratio
is reached.
D. capital-labor ratio will eventually decline. - ANSWER C
The Solow growth model describes:
A. how output is determined at a point in time.
B. how output is determined with fixed amounts of capital and labor.
C. how saving, population growth, and technological change affect output over time.
D. the static allocation, production, and distribution of the economy's output. -
ANSWER C
In this graph, when the capital-labor ratio is OA, AB represents:
A. investment per worker, and AC represents consumption per wAorker.
B. consumption per worker, and AC represents investment per worker.
C. investment per worker, and BC represents consumption per worker.
D. consumption per worker, and BC represents investment per worker - ANSWER A
The steady-state level of capital occurs when the change in the capital stock (k) equals:
A. 0
B. the saving rate.
C. the depreciation rate.
D. the population growth rate. - ANSWER C
In this graph, capital-labor ratio k2 is not the steady-state capital-labor ratio because:
A. the saving rate is too high.
B. the investment ratio is too high.
C. gross investment is greater than depreciation.
D. depreciation is greater than gross investment. - ANSWER A
, In the Solow growth model, if investment is less than 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 - ANSWER C
In the Solow growth model of an economy with no population growth and no
technological progress, the higher the steady capital-per-worker ratio, the higher the
steady-state:
A. growth rate of total output.
B. level of total output.
C. growth rate of output per worker.
D. level of output per worker. - ANSWER D
If the per-worker production function is given by y = k1/2, the saving rate (s) is 0.2, and
the depreciation rate is 0.1, then the steady-state ratio of capital to labor is:
A. 1
B. 2
C. 4
D. 9 - ANSWER C
If the national saving rate increases, the:
A. economy will grow at a faster rate forever.
B. capital-labor ratio will increase forever.
C. economy will grow at a faster rate until a new, higher, steady-state capital-labor ratio
is reached.
D. capital-labor ratio will eventually decline. - ANSWER C
