Econ 320 Set 11-20

If the per-worker production function is given by y = k1/2, the saving ratio is 0.2, and the depreciation rate is 0.1, then the steady-state ratio of output per worker (y) is:

2

If the per-worker production function is given by y = k1/2, the saving ratio is 0.3, and the depreciation rate is 0.1, then the steady-state ratio of output per worker (y) is:

3

If y = k1/2, there is no population growth or technological progress, 5 percent of capital depreciates each year, and a country saves 20 percent of output each year, then the steady-state level of capital per worker is:

16.

The formula for steady-state consumption per worker (c*) as a function of output per worker and investment per worker is:

c* = f(k*) - δk*.

In an economy with no population growth and no technological change, steady-state consumption is at its greatest possible level when the marginal product of:

capital equals the depreciation rate.

In the Solow growth model of an economy with population growth but no technological change, the break-even level of investment must do all of the following except:

equal the marginal productivity of capital (MPK).

If an economy with no population growth or technological change has a steady-state MPK of 0.1, a depreciation rate of 0.1, and a saving rate of 0.2, then the steady-state capital stock:

equals the Golden Rule level.

In the Solow growth model of an economy with population growth but no technological change, if population grows at rate n, total output grows at rate ______ and output per workers grows at rate ______.

n ; 0

In the Solow growth model of an economy with population growth but no technological change, if population grows at rate n, then capital grows at rate ______ and output grows at rate ______.

n ; n

The Solow model with population growth but no technological change cannot explain persistent growth in standards of living because:

output, capital, and population all grow at the same rate in the steady state.