Question 1

A higher saving rate leads to a:

Accepted Answer

The answer of A higher saving rate leads to a:
...

Question 2

In the Solow growth model, if investment is less than depreciation, the capital stock will and output will until the steady state is attained.

Accepted Answer

If investment is less than depreciation, the capital stock will decrease because investment is not enough to compensate for the loss of capital due to depreciation. As a result, output will also decrease because there is less capital available for production. This will continue until the economy reaches a steady state where investment equals depreciation and the capital stock and output become constant.

Question 3

If the per-worker production function is given by y = k1/2, the saving ratio is 0.2, and the depreciation rate is 0.1, then the steady-state ratio of output per worker (y) is:

Accepted Answer

In the steady state, output per worker (y) is constant over time, so we have:
Investment per worker = Depreciation per worker
0.2y = 0.1k1/2
Solving for k, we get:
k = 4y^2
Plugging this into the production function, we get:
y = (4y^2)1/2
y = 2
So the steady-state ratio of output per worker is 2. Therefore, the answer is B.

Question 4

In the Solow growth model, the steady-state occurs when:

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The answer of In the Solow growth model, the steady-state...

Question 5

In the Solow growth model of Chapter 7, the economy ends up with a steady-state level of capital:

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The answer of In the Solow growth model of Chapter...

Question 6

Starting from a steady-state situation, if the saving rate increases, the rate of growth of capital per worker will:

Accepted Answer

In a steady-state situation, the rate of growth of capital per worker is already constant. If the saving rate increases, the investment per worker will also increase, leading to a temporary increase in the rate of growth of capital per worker. This will continue until the economy reaches a new steady-state where the rate of growth of capital per worker is constant once again, but now at a higher level due to increased saving/investment. Therefore, the correct answer is B, the rate of growth of capital per worker will increase until the new steady state is reached.

Question 7

Among the four countries-the United States, the United Kingdom, Germany, and Japan-the one that experienced the most rapid growth rate of output per person between
1948 and 1972 was:

Accepted Answer

Japan experienced the most rapid growth rate of output per person between 1948 and 1972, known as the "Japanese economic miracle," due to significant government intervention and investment in industries such as steel and electronics. The United States and Germany also experienced growth during this time, but at a slower rate than Japan. The United Kingdom's growth rate was the slowest of the four countries during this period.

Question 8

(Exhibit: Capital-Labor Ratio and the Steady State) Reference: Ref 7-2 (Exhibit: Capital-Labor Ratio and the Steady State) In this graph, starting from capital-labor ratio k₁ , the capital-labor ratio will:

Accepted Answer

The answer of (Exhibit: Capital-Labor Ratio and the Steady State)...

Question 9

The formula for the steady-state ratio of capital to labor (k*), with no population growth or technological change, is s:

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The answer of The formula for the steady-state ratio of...

Question 10

If the per-worker production function is given by y = k1/2, the saving ratio is 0.3, and the depreciation rate is 0.1, then the steady-state ratio of output per worker (y) is:

Accepted Answer

In the steady state, output per worker (y) remains constant over time. Thus, we have:

investment per worker = depreciation per worker
s*y = δ*y
0.3*y = 0.1*y
y = k^(1/2)

At the steady state, capital per worker (k) is also constant over time. To find the steady-state value of k, we use the fact that in the steady state, the marginal product of capital (MPK) equals the depreciation rate (δ):

MPK = ∂(y)/∂(k) = 1/(2*k^(1/2))
δ = 0.1

Setting these equal to each other, we have:

1/(2*k^(1/2)) = 0.1
k = 25

Finally, we can use the steady-state value of k to find the steady-state value of y:

y = k^(1/2) = 5^(1/2) * 3^(1/2) = 3.87

So the steady-state ratio of output per worker (y) is approximately 3.87, which is closest to answer choice C) 3.

Question 11

If a war destroys a large portion of a country's capital stock but the saving rate is unchanged, the Solow model predicts output will grow and that the new steady state will approach:

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The answer of If a war destroys a large portion...

Question 12

If the per-worker production function is given by y = k1/2, the saving ratio is 0.3, and the depreciation rate is 0.1, then the steady-state ratio of capital to labor is:

Accepted Answer

The answer of If the per-worker production function is given...

Question 13

In the Solow growth model with no population growth and no technological progress, the higher the steady capital-per-worker ratio, the higher the steady-state:

Accepted Answer

The steady-state level of output per worker is directly proportional to the steady-state capital-per-worker ratio in the Solow growth model. This is because in the model, output is produced using a combination of labor and capital, and higher capital per worker increases productivity, leading to higher output per worker.

Question 14

(Exhibit: Capital-Labor Ratio and the Steady State) Reference: Ref 7-2 (Exhibit: Capital-Labor Ratio and the Steady State) In this graph, capital-labor ratio k₂ Is not The steady-state capital-labor ratio because:

Accepted Answer

The answer of (Exhibit: Capital-Labor Ratio and the Steady State)...

Question 15

In the steady state, the capital stock does not change because investment equals:

Accepted Answer

In the steady state, the capital stock remains constant because the amount of capital investment is equal to the amount of capital consumed through depreciation. Therefore, the correct answer is C) depreciation.

Question 16

In the Solow growth model, if investment exceeds depreciation, the capital stock will and output will until the steady state is attained.

Accepted Answer

When investment exceeds depreciation, the capital stock will increase as there is more investment in the economy leading to an increase in output until the steady state is attained where the capital stock remains constant and output reaches its maximum potential.

Question 17

The Solow model shows that a key determinant of the steady-state ratio of capital to labor is the:

Accepted Answer

According to the Solow model, the steady-state ratio of capital to labor is determined by the saving rate. A higher saving rate leads to higher investment, which in turn leads to an increase in the capital stock. This leads to higher productivity and output in the short run, but eventually the economy reaches a new steady-state where the capital stock, output, and consumption per capita all grow at the same rate. Therefore, the level of output, labor force, and capital elasticity in the production function are not key determinants of the steady-state ratio of capital to labor.

Question 18

If the national saving rate increases, the:

Accepted Answer

A higher national saving rate means there is more money available for investment, leading to an increase in the capital-labor ratio. However, this increase is not infinite as there is a limit to how much capital can be used effectively with a given amount of labor. Therefore, the economy will grow at a faster rate until it reaches a new, higher steady-state capital-labor ratio. Beyond that point, further increases in the saving rate will not lead to sustained economic growth but may instead result in a decline in the capital-labor ratio.

Question 19

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:

Accepted Answer

In the steady state, capital per worker (k) is constant, which means that investment per worker (i) equals depreciation per worker (δk). 
From the production function, 
y = k^(1/2)
Taking derivatives with respect to k,
dy/dk = 1/(2k^(1/2))
i.e. marginal product of capital (MPK) = 1/(2k^(1/2))

At steady-state, investment per worker equals depreciation per worker. Hence,

s*y = δk
s*(k^(1/2)) = δk
s*(k^(1/2)) = δ*(k)
Substituting δ = 0.1 and s = 0.2, we get
0.2*(k^(1/2))= 0.1*k
Solving for k, we get
k=4

Therefore, the steady-state ratio of capital to labor is 4.

Question 20

An economy in the steady state will have:

Accepted Answer

In the steady state, the economy has reached a point where the capital stock (i.e. the amount of physical capital) is no longer increasing or decreasing. This means that investment is equal to depreciation, and since there is no net increase or decrease in capital, there is also no change in the capital stock. Therefore, option D is the correct answer. Options A and B are incorrect because they imply a change in the capital stock, while option C is not enough to fully describe the steady state equilibrium.

Quiz 7: Economic Growth I: Capital Accumulation and Population Growth

A higher saving rate leads to 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.

If the per-worker production function is given by y = k1/2, the saving ratio is 0.2, and the depreciation rate is 0.1, then the steady-state ratio of output per worker (y) is:

In the Solow growth model, the steady-state occurs when:

In the Solow growth model of Chapter 7, the economy ends up with a steady-state level of capital:

Starting from a steady-state situation, if the saving rate increases, the rate of growth of capital per worker will:

Among the four countries-the United States, the United Kingdom, Germany, and Japan-the one that experienced the most rapid growth rate of output per person between 1948 and 1972 was:

(Exhibit: Capital-Labor Ratio and the Steady State) Reference: Ref 7-2 (Exhibit: Capital-Labor Ratio and the Steady State) In this graph, starting from capital-labor ratio k₁ , the capital-labor ratio will:

The formula for the steady-state ratio of capital to labor (k*) , with no population growth or technological change, is s:

If the per-worker production function is given by y = k1/2, the saving ratio is 0.3, and the depreciation rate is 0.1, then the steady-state ratio of output per worker (y) is:

If a war destroys a large portion of a country's capital stock but the saving rate is unchanged, the Solow model predicts output will grow and that the new steady state will approach:

If the per-worker production function is given by y = k1/2, the saving ratio is 0.3, and the depreciation rate is 0.1, then the steady-state ratio of capital to labor is:

In the Solow growth model with no population growth and no technological progress, the higher the steady capital-per-worker ratio, the higher the steady-state:

(Exhibit: Capital-Labor Ratio and the Steady State) Reference: Ref 7-2 (Exhibit: Capital-Labor Ratio and the Steady State) In this graph, capital-labor ratio k₂ Is not The steady-state capital-labor ratio because:

In the steady state, the capital stock does not change because investment equals:

In the Solow growth model, if investment exceeds depreciation, the capital stock will and output will until the steady state is attained.

The Solow model shows that a key determinant of the steady-state ratio of capital to labor is the:

If the national saving rate increases, the:

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:

An economy in the steady state will have:

Quiz 7: Economic Growth I: Capital Accumulation and Population Growth

A higher saving rate leads to 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.

If the per-worker production function is given by y = k1/2, the saving ratio is 0.2, and the depreciation rate is 0.1, then the steady-state ratio of output per worker (y) is:

In the Solow growth model, the steady-state occurs when:

In the Solow growth model of Chapter 7, the economy ends up with a steady-state level of capital:

Starting from a steady-state situation, if the saving rate increases, the rate of growth of capital per worker will:

Among the four countries-the United States, the United Kingdom, Germany, and Japan-the one that experienced the most rapid growth rate of output per person between 1948 and 1972 was:

(Exhibit: Capital-Labor Ratio and the Steady State) Reference: Ref 7-2 (Exhibit: Capital-Labor Ratio and the Steady State) In this graph, starting from capital-labor ratio k1 , the capital-labor ratio will:

The formula for the steady-state ratio of capital to labor (k*) , with no population growth or technological change, is s:

If the per-worker production function is given by y = k1/2, the saving ratio is 0.3, and the depreciation rate is 0.1, then the steady-state ratio of output per worker (y) is:

If a war destroys a large portion of a country's capital stock but the saving rate is unchanged, the Solow model predicts output will grow and that the new steady state will approach:

If the per-worker production function is given by y = k1/2, the saving ratio is 0.3, and the depreciation rate is 0.1, then the steady-state ratio of capital to labor is:

In the Solow growth model with no population growth and no technological progress, the higher the steady capital-per-worker ratio, the higher the steady-state:

(Exhibit: Capital-Labor Ratio and the Steady State) Reference: Ref 7-2 (Exhibit: Capital-Labor Ratio and the Steady State) In this graph, capital-labor ratio k2 Is not The steady-state capital-labor ratio because:

In the steady state, the capital stock does not change because investment equals:

In the Solow growth model, if investment exceeds depreciation, the capital stock will and output will until the steady state is attained.

The Solow model shows that a key determinant of the steady-state ratio of capital to labor is the:

If the national saving rate increases, the:

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:

An economy in the steady state will have:

(Exhibit: Capital-Labor Ratio and the Steady State) Reference: Ref 7-2 (Exhibit: Capital-Labor Ratio and the Steady State) In this graph, starting from capital-labor ratio k₁ , the capital-labor ratio will:

(Exhibit: Capital-Labor Ratio and the Steady State) Reference: Ref 7-2 (Exhibit: Capital-Labor Ratio and the Steady State) In this graph, capital-labor ratio k₂ Is not The steady-state capital-labor ratio because: