Question

**TRUE/FALSE/ OR UNCERTAIN:** Explain whether each
point is true, false, or uncertain and use diagrams and equations
to prove so if relevant.

- Based on the Solow growth model, different saving rates explain varying economic growth rates across countries we observe in the real economy.
- A competitive equilibrium of the Solow growth model is achieved only when the economy reaches the steady state.
- If the consumer’s preferences satisfies the “more is better” assumption, the indifference curves representing her preferences are necessarily bowed in toward the origin.
- In the Solow growth model, the aggregate output, Y , always grows at a constant rate.

Answer #1

Briefly explain after you decide if the statement is True, False
or Uncertain
1. The Original Philips Curve (before 1970s) uses expected
inflation as last year’s inflation
2. Using the Solow growth model, with or without technology, an
economy that increases its saving rate will always experience
faster growth
3. When labor force is constant, if the number of employed
workers in a country decreases, the unemployment rate in the
country will increase
4. The zero lower bound refers to...

True, False or uncertain? Explain whether each of the
following statement is true, false or uncertain. Start your answer
by selecting one of the three statements – “True”, “False” and
“Uncertain” and then provide arguments to justify your selection
(be brief and concise in less than 100 words). You need to make
assumption clear, reasonable and explicit if making any.
a. Nominal interest rates are always higher than real interest
rates. Answer
b. If the lockdown measure due to a further...

True or False and explain why:
Assume two economies are identical in every way except that one
has a lower saving rate. According to the Solow growth model, in
the steady state the country with the lower saving rate will have a
lower level of total output and a lower rate of growth of output
per worker as/than the country with the higher saving rate. Support
your answer with a graph of the solow model.

True, False, or Uncertain [48 marks - 6 marks each]
Explain why each of the following statements is True, False, or
Uncertain according to economic principles. Use diagrams where
appropriate. Unsupported answers will receive no marks. It is the
explanation that is important.
A4-5. Suppose the government funds the provision of a pure
public good from tax revenue. The total burden to the economy of
providing the good exceeds the amount spent on the good.
A4-6. A decrease in posted...

Explain whether the given statement is true, false or
uncertain. Start your answer by selecting one of the options –
“True”, “False” or “Uncertain” and then provide arguments to
justify your selection (be brief and concise and present your
arguments in 100 or less words). You need to ensure your
assumptions are clear, reasonable and explicit if making
any.
Question:
The saving rate (gross domestic saving as a % of GDP) in
Singapore, a small open economy, was 48% in...

Question 1: True, False or uncertain
Explain whether each of the following statement is true, false
or uncertain. Start your answer by selecting one of the three
statements – “True”, “False” and “Uncertain” and then provide
arguments to justify your selection (be brief and concise in less
than 100 words). You need to make assumption clear, reasonable and
explicit if making any. The quality and logic of arguments
determine your marks. (4 marks each)
If the lockdown measure due to...

Explain why each of the following statements is True, False, or
Uncertain according to economic principles. Use diagrams where
appropriate. Unsupported answers will receive no marks. It is the
explanation that is important.
A5-7. An economy with only price taking firms will have a
horizontal short-run aggregate supply curve.
A5-8. A given increase in aggregate demand has a larger effect
on national income the less steeply do unit costs rise with
increases in production.

Determine whether each of the following statements is true,
false, or uncertain. Explain your answer carefully. Include an
IS-LM diagram in your explanations for each part.
a. An exogenous increase in saving raises investment
b. An increase in government spending reduces disposable
income
c. An exogenous reduction in money demand raises investment
spending but reduces saving
d. Because of the crowding out effect, an increase in government
spending may lead to no change in equilibrium income
e. The greater the...

Question 1: True, False or uncertain
Explain whether each of the following statement is true, false
or uncertain. Start your answer by selecting one of the three
statements – “True”, “False” and “Uncertain” and then provide
arguments to justify your selection (be brief and concise in less
than 100 words). You need to make assumption clear, reasonable and
explicit if making any. The quality and logic of arguments
determine your marks. (4 marks each)
The price of cars produced in...

Determine if each of the following statements is TRUE or
FALSE.
a) According the fisher equation, when an economy maintains zero
inflation, the economy's real interest rate is zero as well.
b) In the Slow growth model, when an economy's level of capital
reaches its steady state, the economy's real GDP also reaches its
steady state, if there is no technological progress.
c) In an economy the government's expansionary monetary policy
can creat high inflation, when it is implemented in...

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