Question

1.) In the Solow model with constant technological knowledge (A), when the economy reaches a steady...

1.) In the Solow model with constant technological knowledge (A), when the economy reaches a steady state:
A) catching-up growth occurs.
B) cutting-edge growth occurs.
C) growth stops.
D) both catching-up and cutting-edge growth occur.

2.) Capital is output that is:
A) invested in the stock market.
B) used to produce other goods.
C) invested in the bond market.
D.) consumed.

3.) Better ideas or technological knowledge causes:
A) the production function to shift upward.
B) the investment function to shift upward.
C) both shift upward.
D) neither shift upward.

4.) A good is not rivalrous if:
A) two people cannot consume it at the same time.
B) two or more people can consume it at the same time.
C) it is not substitutable.
D) it is not a private good.

5.) A binding interest rate ceiling will lead to a(n):
A) higher return on saving.
B) increase in saving.
C) shortage of saving.
D) crowding out of saving.

6.) The cause of frictional unemployment include:
A) the business cycle.
B) the scarcity of information.
C) changes of economic structure.
D) labor unions.

7.) The labor force participation rate responds to:
A) incentives to work
B) real GDP growth.
C) job opportunities.
D) business cycles.


Homework Answers

Answer #1
  1. The correct option is ©. At the steady state level stability is reached and equilibrium is reached and no changes occurs in any of the variable.
  2. The correct option is (B). The capital used in output production.
  3. The correct option is A. The increase in knowledge shifts the production function to shift upwads implying increased output for every unit of input.
  4. The correct option is B. Non rivalrous means that consumption by one in society doesn’t reduce consumption for other.
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