Macro Chapter 9

When capital increases by ΔK units and labor increases by ΔL units, output (ΔY) increases by:

(MPK × ΔK) + (MPL × ΔL) units.

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

0

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 approximately at a rate of:

5 percent.

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

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

The majority of empirical evidence supports the hypothesis that economies that are open to trade _____ than comparable closed economies.

grow more rapidly

If two economies are identical (including having the same saving rates, population growth rates, and efficiency of labor), but one economy has a smaller capital stock, then the steady-state level of income per worker in the economy with the smaller capital stock:

will be at the same level as in the steady state of the high capital economy.

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

When capital increases by ΔK units, output increases by:

MPK × ΔK units.

The Solow residual measures the portion of output growth that cannot be explained by growth in:

capital and labor.

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.

The balanced growth property of the Solow growth model with population growth and technological progress predicts which of the following sets of variables will grow at the same rate in the steady state?

output per worker, capital per worker, real wage

Endogenous growth theory rejects the assumption of exogenous:

technological change.

According to the Solow model, persistently rising living standards can only be explained by:

technological progress.

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.