ECO 3311 - PS6

If the labor force is growing at a 3 percent rate and the efficiency of a unit of labor is growing at a 2 percent rate, then the number of effective workers is growing at a rate of:

5 percent.

In a Solow model with technological change, if population grows at a 2 percent rate and the efficiency of labor grows at a 3 percent rate, then in the steady state output per actual worker grows at a ______ percent rate.

3

In a Solow model with technological change, if population grows at a 2 percent rate and the efficiency of labor grows at a 3 percent rate, then in the steady state total output grows at a ______ percent rate.

5

If the marginal product of capital net of depreciation equals 10 percent and the rate of population growth equals 2 percent, then this economy will be at the Golden Rule steady state if the rate of technological progress equals _____ percent.

8

With population growth at rate n and labor-augmenting technological progress at rate g, the Golden Rule steady state requires that the marginal product of capital (MPK):

net of depreciation be equal to n + g.

In the Solow model with technological progress, the steady-state growth rate of capital per effective worker is:

0.

In a steady-state economy with population growth n and labor-augmenting technological progress g, persistent increases in standard of living are possible because the:

capital stock grows faster than does the labor force.

In the Solow model with technological change, the Golden Rule level of capital is the steady state that maximizes:

consumption per effective worker.

In the Solow growth model with population growth and technological change, the break-even level of investment must cover:

depreciating capital, capital for new workers, and capital for new effective workers.

The number of effective workers takes into account the number of workers and the:

efficiency of each worker.

Which of the following changes would bring the U.S. capital stock, currently below the Golden Rule level, closer to the steady-state, consumption-maximizing level?

increasing the saving rate

If the per-worker production function is y = Ak, where A is a positive constant, then the marginal product of capital:

is constant as k increases.

Assuming that technological progress increases the efficiency of labor at a constant rate is called:

labor-augmenting technological progress.

Other things being equal, all of the following government policies are likely to increase national saving except:

running a budget deficit.

If the marginal product of capital net depreciation equals 8 percent, the rate of growth of population equals 2 percent, and the rate of labor-augmenting technical progress equals 2 percent, to reach the Golden Rule level of the capital stock the ____ rate in this economy must be _____.

saving; increased.

In a steady-state economy with a saving rate s, population growth n, and labor-augmenting technological progress g, the formula for the steady-state ratio of capital per effective worker (k*), in terms of output per effective worker (f(k*)), is (denoting the depreciation rate by ):

sf(k)/( + n + g).

In a steady state with population growth and technological progress:

the capital and labor shares of income are constant.

The rate of labor-augmenting technological progress (g) is the growth rate of:

the efficiency of labor.

In the Solow growth model with population growth and technological change, the steady-state growth rate of income per person depends on:

the rate of technological progress.

In comparing two countries with different levels of education but the same saving rate, rate of population growth, and rate of technological progress, one would expect the more highly educated country to have:

the same growth rate of total income and a higher real wage.

If the production function is y = k1/2, the steady-state value of y is:

y = s/( + n + g).

In the Solow growth model, the steady-state growth rate of output per effective worker is ______, and the steady-state growth rate of output per actual worker is ______.

zero; the rate of technological progress

In a Solow model with technological change, if population grows at a 2 percent rate and the efficiency of labor grows at a 3 percent rate, then in the steady state, output per effective worker grows at a ______ percent rate.

0

In the Solow model with technological progress, the steady-state growth rate of output per effective worker is:

0.

If the U.S. production function is Cobb-Douglas with capital share 0.3, output growth is 3 percent per year, depreciation is 4 percent per year, and the capital-output ratio is 2.5, the saving rate that is consistent with steady-state growth is:

17.5 percent.