Question

A) If an economy is in a steady state with no population growth or technological change and the marginal product of capital is greater than the depreciation rate:

steady-state consumption per worker would be higher in a steady state with a higher saving rate.

steady-state consumption per worker would be higher in a steady state with a lower saving rate.

the depreciation rate should be decreased to achieve the Golden Rule level of consumption per worker.

the economy is following the Golden Rule.

B)Which of the following would raise the measured level of investment in the national income accounts?

I purchased shares in Zoom Inc. at the beginning of the pandemic.

Mary buys a pizza for lunch.

Sam buys a house that was built 100 years ago.

Tesla produces cars that are not sold this year.

George saves part of his income in a saving account.

C)In the Solow growth model, a country with a population growth rate of 3%, no technological growth, and depreciation rate 4%, will exhibit a steady state growth rate in output per worker of:

0%

-1%

3%

4%

7%

D)Which of the following policies were not adopted by the government in an attempt to reduce the natural rate of unemployment?

unemployment insurance

public retraining programs

government employment agencies

a bonus program for unemployment insurance claimants who found jobs quickly

E)In the Solow model, if Indonesia lowers its population growth rate, this will ____ the steady state level of output per person,and ____ the steady state growth rate in total output (not per person).

raise, not change

raise, raise

lower, raise

not change, raise

raise, lower

Answer 1

The answers are as follows:-

1)steady-state consumption per worker would be higher in a steady state with a lower saving rate.

2)George saves part of his income in a saving account

(This increases the quantity of loanable funds available to banks)

3)7%

(Add pop growth rate and depreciation and calculate to offset)

4)a bonus program for unemployment insurance claimants who found jobs quickly

(This program is aimed at frictional unemployment)

5)raise, lower

It raises the output per person since total output will be divided by a lower pop number.

The total lowers since higher pop growth leads to higher total growth rate.