MacroEcon final prep
The slope of the output per worker function is equal to the
marginal product of capital
Asymmetric information means:A) some market participants have more information than others.B) some Previous Editions are more important than others.C) some market participants interpret Previous Editions differently.D) the impact of Previous Editions on economic outcomes depends on the context.
A) some market participants have more information than others.
When the capital is accumulated in the steady state, the marginal product of capital is equal to
MPk = (n+d)
Which of the following statements best describes the characters of accumulating physical capital and human capital?
Physical capital accumulation is subject to decreasing marginal returns, but human capital accumulation is not.
An increase in the real interest rate is an example of
a substitution effect and an income effect whose sign depends on whether the consumer is initially a borrower or a lender
In the endogenous growth model presented in the text,
both consumption and human capital grow at the same rate
The per-worker production function relates output per worker to
capital per worker
With an increase in total factor productivity in the Solow growth model
the economy reaches a steady state with higher output
With an increase in total factor productivity in the Solow growth model,
the economy reaches a steady state with higher output
Suppose a country is much richer than the others in the Solow growth model. What happens in the long run
the other countries catch up to the rich one
A relationship that shows the technological possibilities for an economy as a whole is
the production possibilities frontier
At the competitive equilibrium with a positive proportional labor income tax,
the real wage before tax is lower than the marginal product of labor
Which feature of the data can the Solow growth model not replicate
there is a widening gap between income levels across countries
The Laffer curve is a curve showing
tax revenue as a function of the tax rate
In Solow growth model, output per capita eventually stops growing because of
Diminishing marginal product of capital
In Solow's exogenous growth model, the steady-state growth rate of aggregate capital can be increased by
consumption per worker
The Golden Rule of capital accumulation maximizes the steady-state level of
consumption per worker
When drawn against the real interest rate, the output demand curve unambiguously shifts to the right if
current capital decreases.
In the steady state of Solow's exogenous growth model, an increase in the growth rate of labor force
decreases output per worker and decreases capital per worker
In the Solow growth model, the law of motion of capital takes into account the
depreciation of old capital
In the steady state of Solow's exogenous growth model, an increase in the savings rate ___________ output per worker and ___________ capital per worker
increases;increases
In the steady state of Solow's exogenous growth model, an increase in total factor productivity _____________ output per worker and _____________ capital per worker.
increases;increases
An increase in government spending
reduces consumption, increases hours worked, and reduces the real wage
In Solow's model of economic growth, suppose that s represents the savings rate, z represents total factor productivity, k represents the level of capital per worker, and f (k) representsthe per worker production function. Also suppose that n represents the population growth rate and d represents the depreciation rate of capital. The equilibrium level of capital per worker, k* , will satisfy the equation:
szf(k)=(n+d)k
If the proportion of bad borrowers increases
the borrowing interest rate increases
In Solow's exogenous growth model, the principal obstacle to continuous growth in output per capita is due to
the declining marginal product of capital
The Solow residual attempts to measure the amount of output not explained by
the direct contribution of labor and capital
