Question

In: Economics

According to the Solow model, in the steady state, both output per worker Y/L and the...

According to the Solow model, in the steady state, both output per worker Y/L and the capital stock per worker K/L grow at the rate of technological progress, and (choose one or both)

A this is confirmed by U.S. data for the past half century—about 2 percent per year

B this means that the capital-output ratio has remained approximately constant over time

Technological progress also affects factor prices, and in the steady state, (choose two)

A the real wage is constant over time

B the real wage grows at the rate of technological progress

C the real rental price of capital is constant over time

D the real rental price of capital grows at the rate of technological progress

The economies of the world exhibit

A conditional convergence

B unconditional convergence

International differences in income per person can be attributed to (choose one or more)

A differences in the quantities of physical and human capital

B differences in the efficiency with which economies use their factors of production

Expert Solution

In the Solow model of growth, the technological progress the output per worker and the capital stock per worker increases.

1). The correct option is (b).

This means that the capital-output ratio has remained approximately constant over time.

2). The correct option is (b). and (d).

B the real wage grows at the rate of technological progress.

D the real rental price of capital grows at the rate of technological progress

The real wage rate grows as there is a technological progress in the economy.

3). The correct option is (a).

A conditional convergence.

Conditional convergence implies that a country or a region is converging to its own steady state while the unconditional convergence (absolute convergence) implies that all countries or regions are converging to a common steady state potential level of income.

4). The correct option is (Both).

differences in the quantities of physical and human capital

differences in the efficiency with which economies use their factors of production.

Hope you got the answer.

Kindly comment for further explanation.

Thanks!

Rahul Sunny answered 7 months ago

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