ec hw 2

golden rule level of capital accumulation is the steady state with the highest level of

consumption per worker

in the case of an unanticipated inflation

creditors with an unindexed contact are hurt because they get less than they expected in real terms

during hyperinflation real tax revenue of the government often drops substantially because of the

delay between when a tax is levied and when it is collected

in the steady state with no population growth or technological change, the capital stock does not change because investment equals

depreciation

unlike the long-run classical model, the solow growth model

describes changes in the economy over time

if the national saving rate increases, the

economy will grow at a faster rate until a new, higher, steady-state capital labor ratio is reached

the golden rule level of the steady state capital stock

implies a choice of a particular saving rate

the cost of reprinting catalogs and price lists because of inflation are called

menu cost

compared to periods of lower rates of inflation, during hyperinflation all of the following occur except

relative prices do a better job of reflecting true scarcity

the major source of government revenue in most countries that are experiencing hyperinflation is

seigniorage

the cost of unexpected inflation, but not of expected inflation are

the arbitrary redistribution of wealth between debtors and creditors

in the solow growth model, the assumption of constant returns to scale means that

the number of workers in an economy does not affect the relationship between output per worker and capital per worker

a variable rate of inflation is undesirable because

variable inflation leads to greater uncertainty and risk as compared to constant inflation