Question

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) will cause

no change in the growth rate of Y/N

a reduction in K/N.

a reduction in Y/N.

all of the other answers are correct

a reduction in C/N.

15.

In an open economy under flexible exchange rates, an increase in wealth that causes an increase in consumption will cause which of the following?

A decrease in output.

An increase in net exports.

A decrease in taxes.

An appreciation of the domestic currency.

A decrease in the exchange rate.

16.

Suppose there are two countries that are identical with the following exception: the saving rate in country A is greater than the saving rate in country B. Given this information, according to Solow model without technological progress, we know that in the long run:

economic growth will be higher in A than in B.

output per capita will be greater in A than in B.

output per capita will be the same in the two countries.

output per capita will be greater in B than in A.

economic growth will be higher in B than in A

17. In Solow model where it is assumed that the state of technology does not change, what parameters and/or variables cause changes in steady state output per worker?

all of other answers are correct

savings rate

human capital per worker

production function parameters

depreciation rate

Answer 1