Macro midterm 3

Consider the Solow model with both population growth and technological progress. If a war destroys a large portion of a country's capital stock, but the saving rate is unchanged, then total output will grow at a rate ______ n+g . A. Faster than B. Equal to C. Slower than D. Any of these

A. Faster than

In the Solow growth model with both population growth and technological progress, the steady state growth rate of output per effective workers is __________. A. Zero B. the rate of technological progress. C. the rate of population growth. D. the sum of the rate of technological progress plus the rate of population growth.

A. Zero

Starting from the natural level of output, with policy intervention, the long run impact of an adverse supply shock is _______. A prices will be permanently higher and output will be restored to the natrual level. B. prices will return to the old level and output will be restored to the natural level. C. Prices will be permanently higher and output will be permanently lower. D. prices will return to the old level and output will be permanently lower.

A. prices will be permanently higher and output will be restored to the natural level.

When the output is ______ natural level of output in the short run, the price level rises over time. During the process, output will _____.

Above; Decrease

Starting from the natural level of output, when the economy is left to its own devices, the long-run impack of a favorable supply shock is _____. A. prices will be permanently lower, and output will be restored to the natural level. B. prices will return to the old level and output will be restored to the natural level. C. prices will be permanently lower and output will be permanently higher. D. prices will return to the old level and output will be permanently higher.

B. Prices will return to the old level and output will be restored to the natural level.

According to the Solow model with populaiton and technological progress, other things equal, a fall in population growth leads to a _____ GDP growth rate and a ____ level of GDP per person. A. higher; higher B. lower; higher C. higher; lower D. lower; lower

B. lower; higher

Starting from the natural level of output, when the economy is left to its own devices, the long-run impact of an adverse supply shock is _____. A. prices will be permanently higher, and output will be restored to the natural level. B. Prices will return to the old level and output will be restored to the natural level. C. Prices will be permanently higher and output will be permanently lower. D. Prices will return to the old level and output will be permanently lower.

B. prices will return to the old level and output will be restored to the natural level.

In the Solow growth model with both population growth and technological progress, the steady state growth rate of output per actual workers is ______. A. Zero B. the rate of technological progress. C. the rate of population growth. D. the sum of the rate of technological progress plus the rate of population growth.

B. the rate of technological progress

In the Solow growth model with both population and technological progress, if in the steady state the marginal product of capital equals 0.10, the depreciation rate equals 0.05, the rate of population growth equals 0.01, and the rate of technological progress equals 0.02, then the capital per effective worker is _______ the Golden Rule level. A. is higher than B. is equal to C. is lower than D. will move to

C. Is lower than

In the Solow growth model with population growth and technological progress, the Golden Rule gives the steady state that maximizes: A. output per effective worker B. output per actual worker C. consumption per effective worker D. capital stock per effective worker

C. consumption per effective worker

An increase in money supply will, according to the ADAS model, raise the countries real GDP. A. in both the long run and the short run. B. in neither the long run nor the short run. C. in the short run only. D. in the long run only.

C. in the short run only

If the unemployment rate in 2016 was 1.5% higher than in 2015, then according to Okun's law, the 2016 real GDP growth rate would be ______. A. 3% B. 2% C. 1% D. 0%

D. 0%

An increase in money supply will, according to the ADAS model, raise the economy's price level _____. A. in both the long run and the short run. B. in neither the long run nor the short run. C. in the short run only. D. in the long run only.

D. in the long run only

In the solow model with both population growth and technological progress, the steady state growth rate of total output is _______. A. Zero B. the rate of technological progress. C. the rate of population growth. D. the sum of the rate of technological progress plus the rate of population growth.

D. the sum of the rate of technological progress plus the rate of population growth

True or False about the economy's self correction mechanism after a negative demand shock. When in a recession, the economy will never recover if left to its own devices.

FALSE

True or False about the economy's self correction mechanism after a negative demand shock. When left to its own devices, the economy recovers immediately from the shock.

FALSE

True or False about the economy's self correction mechanism after a negative demand shock. The gradual adjustment of prices helps the economy recover slowly.

TRUE

True or False about the economy's self correction mechanism after a negative demand shock. When left to its own devices, a period of lower output and high unemployment is endured.

TRUE