Question

Please EXPLAIN why each answer was chosen

1. reduction in the saving rate will NOT affect which of the following variables in the long run?

A. the amount of capital in the economy. B. output per worker. C. capital per worker. D. the growth rate of output per worker. E. none of the above

2. Which of the following will cause an increase in output per effective worker?

A. an increase in the rate of depreciation. B. an increase in the rate of technological progress. C. an increase in the saving rate. D. an increase in population growth.

E. a reduction in the saving rate.

Answer #1

1. Option D.

- Reduction in the saving rate will not affect the growth rate of output per worker.
- This is because when the saving rate decreases, output also falls in the long run.
- This will eventually decrease the productivity growth within a nation.
- When there is no productivity growth, the growth rate of output per worker will remain remain constant in the long run.

2. Option C.

- When saving rate increases within an economy, the output per effective worker increases.
- This is because when the saving rate increases, the investment spending also increases within the economy.
- This will increase the capital stock available for the production of outputs.
- Therefore, When capital increases, the output per effective worker also increases.

Q1
A permanent reduction in the saving rate will:
A. increase the growth of output per worker only
temporarily.
B. increase the steady state growth of output per worker.
C. decrease the growth of output per worker only
temporarily.
D. decrease the steady state growth of output per worker.
E. increase or decrease the steady state growth of output per
worker, depending on the level of saving to begin with.
Q2
Suppose the Phillips curve is represented by πt
-...

13. Suppose there is an increase in government spending in a
closed economy. In medium-run such a fiscal policy will cause:
none of the other answers is correct.
ambiguous effects on the neutral real interest rate
the nominal wage to rise
no change in the neutral real interest rate
the neutral real interest rate to rise
14. Suppose the economy is initially in the steady state.
According to Solow model without technological progress, an
increase in the depreciation rate (δ)...

Question 1
Growth Suppose that the economy’s production function is: ?? =
?? 0.35(???? ) 0.65 and that the saving rate (s) is equal to 10%
and that the rate of depreciation (?) is equal to 2%. Further,
suppose that the number of workers grows at 5% per year and that
the rate of technological progress is 1% per year.
a. Find the steady-state values of:
• capital stock per effective worker
• output per effective worker
• consumption per...

1. Suppose that the economy’s production function is Y = K.25
(eL).75 , that the saving rate, s, is equal to 21 percent, and the
depreciation rate, d, is equal to 5 percent. Suppose further that
the number of workers, L, grows at 1 percent a year and that the
rate of technological progress, g, is 1 percent per year. Find the
steady-state values of the following:
a. The capital stock per efficiency units of labor
b. Output per efficiency...

Suppose there is a permanent increase in a country's saving
rate. This increase in the saving rate will cause:
Group of answer choices
a permanently higher level of capital per worker.
a permanently higher level of output per capita.
a permanently faster growth rate of output.
both of the first two answers above
none of the above.

1) In the steady state of the Solow model with technological
progress, which of the following variables is not
constant?
(a) capital per effective worker
(b) the real rental price of capital
(c) the real wage
(d) the capital-output ratio
2) The U.S. economy has more/less capital than at
the Golden Rule steady state, suggesting that it may be desirable
to
increase/decrease the rate of saving.
3) The purpose of exogenous/endogenous
growth theory is to explain technological progress. Some of these...

Answer the following
Y = f(k) = ka, where a = 0.25
S = 0.3
δ = 0.2
n = 0.05
g= 0.02
a. Find the steady state capital per effective worker, output
per effective worker, investment per effective worker, and
consumption per effective worker.
b. Find the steady state growth rate of capital per worker,
output per worker, investment per worker, and consumption per
worker.
c. Find the steady state growth rate of capital, output,
investment, and consumption.
d....

In the Solow growth model of an economy with population growth
and technological progress, the steady-state growth rate in output
per worker is equal to:
(a) zero
(b) the rate of technological progress g.
(c) the growth rate of population n plus the rate of technological
progress g. (d) the rate of technological progress g minus the
growth rate of population n.
In the Solow growth model of an economy with population growth
and technological progress, the steady-state growth rate...

Use information to answer questions below.
Y = f(k) = ka, where a = 0.25
S = 0.3
δ = 0.2
n = 0.05
g= 0.02
a. Find the steady state capital per effective worker, output
per effective worker, investment per effective worker, and
consumption per effective worker.
b. Find the steady state growth rate of capital per worker,
output per worker, investment per worker, and consumption per
worker.
c. Find the steady state growth rate of capital, output,
investment,...

a) Consider a world with decreasing returns to scale (i.e, ? = ?
1 2) in the steady state which experiences an increase in the
population growth rate. What happens to total output and output per
worker?
b) . What happens to the steady-state standard of living in an
economy with population growth rate n and labor-augmenting
technological progress g? The standard of living is ? ? .
Explain
c) With population growth rate n and no technological progress,
we...

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