Question

14. In the Solow-Swan growth model of Chapter 8, the economy ends up in the long run with a steady state level of capital per worker:

A. only if it starts with capital per worker less than the steady-state level.

B. only if it starts with capital per worker more than the steady-state level.

C. only if it starts with capital per worker equal to the steady-state level.

D. regardless of its starting level of capital per worker.

15. In the Solow-Swan growth model of an economy with no population growth and no technological progress, the higher the steady capital per worker, the higher the steady-state:

A. growth rate of total output.

B. level of total output.

C. growth rate of output per worker.

D. Output per worker.

16. In the Solow-Swan growth model of Chapter 8, the steady-state occurs when:

A. capital per worker is constant.

B. the saving rate equals the depreciation rate.

C. output per worker equals consumption per worker.

D. consumption per worker is maximized.

Answer 1

14)In the Solow-Swan growth model , the economy ends up in the long run with a steady state level of capital per worker: regardless of its starting level of capital per worker.

As the economy will approach steady state in any case whatever be the starting level of capital per worker in the solow swan model.

15)In the Solow-Swan growth model of an economy with no population growth and no technological progress, the higher the steady capital per worker, the higher the steady-state: Output per worker.

as the output per worker depends on the capital per worker in the solow swan model when there is no technological change or no population growth.

16. In the Solow-Swan growth model of Chapter 8, the steady-state occurs when: the saving rate equals the depreciation rate.

That is the equilibrium level or the steady state level in the solow swan model where the savings equals depreciation and then the economy reaches its state of rest. And then there is no room for adjustment