Macro - Ch. 8 & 9

Public policies in the United States designed to stimulate technological progress include:

- subsidies given by the National Science Foundation. - tax breaks for research and development. - the temporary monopoly granted by the patent system.

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

capital stock grows faster than does the labor force.

Empirical results justify substantial government subsidies to research based on the finding that the:

the private return to research is less than the social return to research.

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

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

grow more rapidly

If an economy is in a steady state with no population growth or technological change and the capital stock is below the Golden Rule:

if the saving rate is increased, output per capita will rise and consumption per capita will first decline and then rise above its initial level.

In the Solow growth model of Chapter 8, for any given capital stock, the ______ determines how much output the economy produces and the ______ determines the allocation of output between consumption and investment.

production function; saving rate