QUESTION 1 Assume a Cobb-Douglas production with capital share 1/3; total factor productivity equal to 1, total population in an economy is equal to 1, depreciation rate is 5 percent and saving rate is 10 percent. Then the steady-state level of capital is about:
a. 0.8
b. 1.6
c.1.3
d.2.8
e. 0.3
Question 2 If a natural disaster destroys a large portion of a country's capital stock but the saving and depreciation rates are unchanged, the Solow model predicts that the economy will grow and eventually reach:
a. A lower steady-state level of output than it would have before the disaster
b. None of these answers is correct
C. The same steady-state level of output as it would have before the disaster
d. A higher steady-state level of output than it would have before the disaster
e. Not enough information is given

QUESTION 3
Suppose you are given the data for Brazil and Portugal. In Brazil, the saving rate is 0.1 and the depreciation rate is 0.1, while in Portugal saving rate is 0.2 and the depreciation rate is 0.1. Using the Solow model, you conclude that in the steady-state:
a. Brazil has a higher capital-output ratio than Portugal
b. Portugal has a higher capital-output ratio than Brazil
c. Brazil has a higher level of output than Portugal
d. Portugal has a higher level of output than Brazil Portugal and Brazil have the same capital-output ratio

QUESTION 4 In the Solow model, if a country's saving rate increases, the country:
a. Stays at a constant high steady state
b. Stays at a constant low steady state
C. Moves from a relatively low steady state to one that is higher
d. Moves from a relatively low steady state to one that is lower,
e. Moves from a relatively high steady state to one that is lower Clear my choice

QUESTION 5 If the current capital stock per person in South Korea is greater than the current capital stock per person in China and total factor productivity is the same in both countries, according to the Solow model: a. Both South Korea and China initially will grow at the same rate and have the same steady state
b. China initially will grow faster than South Korea, but each will have the same steady state
c.China initially will grow faster than South Korea and will have a higher steady state
d. China initially will grow slower than South Korea, but each will have the same steady state
е. China initially will grow faster than South Korea and will have a lower steady state
QESTION 6 for which of the following does the Solow model NOT provide adequate explanation?
a. What causes long-term economic growth
b. The case of productivity differences across countries
c. Why saving rates differ across countries d. All of these answers are correct
e. Why population growth rates differ across countries

question 7 Using the Solow model, if, in time, t=0, the initial capital stock is 100, investment is 25, the population is normalized to 1, and e 10 percent, then capital accumulation from period t=0 to period t=1 is:
a. 15
b. 115
c. 35
d. D. 0
e. -15

Question

QUESTION 1 Assume a Cobb-Douglas production with capital share 1/3; total factor productivity equal to 1, total population in an economy is equal to 1, depreciation rate is 5 percent and saving rate is 10 percent. Then the steady-state level of capital is about:
a. 0.8
b. 1.6
c.1.3
d.2.8
e. 0.3
Question 2 If a natural disaster destroys a large portion of a country's capital stock but the saving and depreciation rates are unchanged, the Solow model predicts that the economy will grow and eventually reach:
a. A lower steady-state level of output than it would have before the disaster
b. None of these answers is correct
C. The same steady-state level of output as it would have before the disaster
d. A higher steady-state level of output than it would have before the disaster
e. Not enough information is given

QUESTION 3
Suppose you are given the data for Brazil and Portugal. In Brazil, the saving rate is 0.1 and the depreciation rate is 0.1, while in Portugal saving rate is 0.2 and the depreciation rate is 0.1. Using the Solow model, you conclude that in the steady-state:
a. Brazil has a higher capital-output ratio than Portugal
b. Portugal has a higher capital-output ratio than Brazil
c. Brazil has a higher level of output than Portugal
d. Portugal has a higher level of output than Brazil Portugal and Brazil have the same capital-output ratio

QUESTION 4 In the Solow model, if a country's saving rate increases, the country:
a. Stays at a constant high steady state
b. Stays at a constant low steady state
C. Moves from a relatively low steady state to one that is higher
d. Moves from a relatively low steady state to one that is lower,
e. Moves from a relatively high steady state to one that is lower Clear my choice

QUESTION 5 If the current capital stock per person in South Korea is greater than the current capital stock per person in China and total factor productivity is the same in both countries, according to the Solow model: a. Both South Korea and China initially will grow at the same rate and have the same steady state
b. China initially will grow faster than South Korea, but each will have the same steady state
c.China initially will grow faster than South Korea and will have a higher steady state
d. China initially will grow slower than South Korea, but each will have the same steady state
е. China initially will grow faster than South Korea and will have a lower steady state
QESTION 6 for which of the following does the Solow model NOT provide adequate explanation?
a. What causes long-term economic growth
b. The case of productivity differences across countries
c. Why saving rates differ across countries d. All of these answers are correct
e. Why population growth rates differ across countries

question 7 Using the Solow model, if, in time, t=0, the initial capital stock is 100, investment is 25, the population is normalized to 1, and e 10 percent, then capital accumulation from period t=0 to period t=1 is:
a. 15
b. 115
c. 35
d. D. 0
e. -15

Accepted Answer

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QUESTION 1 Assume a Cobb-Douglas production with capital share 1/3; total factor productivity equal to 1, total population in an economy is equal to 1, depreciation rate is 5 percent and saving rate is 10 percent. Then the steady-state level of capital is about: a. 0.8 b. 1.6 c.1.3 d.2.8 e. 0.3