Int. Macro Ch9

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

0

Labor hoarding

continuing to employ workers during a recession to ensure they will be available in the recovery

Which of the following changes would bring the U.S. capital stock, currently below the Golden Rule level, closer to the steady-state, consumption-maximizing level?

increasing the saving rate

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.

A possible externality associated with the process of accumulating new capital is that:

new production processes may be devised.

Assume that an economy described by the Solow model is in a steady state with output and capital growing at 3 percent and labor growing at 1 percent. The capital share is 0.3. The growth-accounting equation indicates that the contributions to growth of capital, labor, and total factor productivity are:

0.9 percent, 0.7 percent, and 1.4 percent, respectively.

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%

If Y is output, K is capital, u is the fraction of the labor force in universities, L is labor, and E is the stock of knowledge, and the production Y = F (K,(1 - u) EL) exhibits constant returns to scale, then output (Y) will double if:

K and E are doubled

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

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

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

One explanation for greater economic development in moderate versus tropical climates is that institutions established by colonial settlers in moderate climates ______, while institutions established by colonists in tropical climates ______.

protected property rights; were extractive and authoritarian

Total factor productivity =

rate of growth of output - rate of growth of capital input, * capital's share of output + rate of growth of labor input, * labor's share of output

If the Japanese production function is Cobb-Douglas with capital share 0.3, output growth is 3 percent per year, depreciation is 4 percent per year, and the capital-output ratio is 2.5, the saving rate that is consistent with steady-state growth is:

s= depreciation rate delta + output growth n + g * (capital output ratio)--> (4%+3%)*2.5= 17.5%

Endogenous growth theory rejects the assumption of exogenous:

technological change.

If two economies are identical (with the same population growth rates and rates of technological progress), but one economy has a lower saving rate, then the steady-state level of income per worker in the economy with the lower saving rate:

will be at a lower level than in the steady state of the high-saving economy.

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.