Question 1

In the model where it is assumed that the state of technology does not change,what parameters and / or variables cause changes in steady state output per worker.

Accepted Answer

The answer of In the model where it is assumed...

Question 2

In the model where it is assumed that the state of technology does not change,what parameters and / or variables cause changes in steady state output per worker?
A)savings rate
B)depreciation rate
C)human capital per worker
D)all of above
E)none of above

Accepted Answer

In the model where it is assumed that the state of technology does not change, changes in steady state output per worker are determined by the amount of physical capital per worker, the amount of human capital per worker, the savings rate, and the depreciation rate. Therefore, all of the above parameters and/or variables cause changes in steady state output per worker.

Question 3

An increase in the saving rate will NOT affect which of the following variables in the long run?
A)output per worker
B)the growth rate of output per worker
C)the amount of capital in the economy
D)capital per worker
E)none of the above

Accepted Answer

In the long run, the growth rate of output per worker is determined by technological progress, not by the saving rate. An increase in the saving rate affects the level of output per worker, capital per worker, and the amount of capital, but not the long-term growth rate.

Question 4

Suppose the following situation exists for an economy: Kt+1 / N < Kt / N.Given this information,we know that
A)saving per worker equals depreciation per worker in period t.
B)saving per worker is less than depreciation per worker in period t.
C)saving per worker is greater than depreciation per worker in period t.
D)the saving rate fell in period t.
E)none of the above

Accepted Answer

The inequality given in the question represents a decline in the economy's capital-labor ratio between periods t and t+1. Therefore, the amount of capital per worker is decreasing, indicating that the economy is investing less than the amount of capital required to replace depreciating capital. In other words, the economy is saving less than the rate at which the capital stock is diminishing due to depreciation. Hence, saving per worker is less than depreciation per worker in period t.

Question 5

Based on our understanding of the model presented in chapter 11,which of the following will cause a permanent increase in growth?
A)an increase in education spending
B)an increase in the saving rate
C)an increase in capital accumulation
D)all of the above
E)none of the above

Accepted Answer

The answer of Based on our understanding of the model...

Question 6

The capital-labor ratio will tend to increase over time when
A)investment per worker equals saving per worker.
B)investment per worker exceeds saving per worker.
C)investment per worker is less than depreciation per worker.
D)saving per worker equals depreciation per worker.
E)output per worker is less than capital per worker.

Accepted Answer

The capital-labor ratio is the amount of capital per worker. If investment per worker exceeds saving per worker, there is a net increase in the amount of capital available per worker. Therefore, the capital-labor ratio will tend to increase over time.

Question 7

As an economy adjusts to an decrease in the saving rate,we would expect output per worker
A)to decrease at a constant rate and continue decreasing at that rate in the steady state.
B)to decrease at a permanently higher rate.
C)to increase at a permanently higher rate.
D)to return to its original level.
E)none of the above

Accepted Answer

The answer of As an economy adjusts to an decrease...

Question 8

Which of the following will likely cause a reduction in output per worker?
A)a reduction in education expenditures
B)a reduction in the saving rate
C)a reduction in on-the-job training
D)all of the above

Accepted Answer

All of the given options are likely to cause a reduction in output per worker. Education expenditures improve the skills and knowledge of workers, leading to increased productivity. A reduction in saving rate means that businesses have less access to funds for investment, which can affect their ability to purchase new equipment and technology to enhance productivity. On-the-job training also helps workers gain skills and knowledge, which they can use to increase their productivity. Therefore, any reduction in these factors can lead to a decline in output per worker.

Question 9

Explain the relationship among output,saving,and investment.

Accepted Answer

The answer of Explain the relationship among output,saving,and investment....

Question 10

In the absence of technological progress,a decrease in the saving rate will cause which of the following?
A)decrease temporarily the growth of output per worker
B)decrease the steady state growth of output per worker
C)increase temporarily the growth of output per worker
D)increase the steady state growth of output per worker
E)have an ambiguous effect on the growth of output per worker

Accepted Answer

A decrease in the saving rate leads to a decrease in investment in new capital, which can temporarily slow down the growth of output per worker until the economy adjusts to a new lower steady state. The steady state growth of output per worker is not affected by the saving rate in the long run, as it is determined by technological progress.

Question 11

Suppose there are two countries that are identical in every way with the following exception: Country A has a higher saving rate than country B.Given this information,we know with certainty that
A)the growth rate will be higher in A than in B.
B)the growth rate will be the same in the two countries.
C)the level of consumption per worker will be higher in A.
D)the level of consumption per worker will be higher in B.

Accepted Answer

The answer of Suppose there are two countries that are...

Question 12

In the absence of technological progress,we know with certainty that an decrease in the saving rate will cause which of the following?
A)decrease steady state consumption
B)increase steady state consumption
C)have no effect on steady state consumption
D)decrease steady state consumption only if the decrease in saving exceeds the increase in depreciation
E)decrease steady state consumption only if the decrease in saving is less than the decrease in depreciation

Accepted Answer

The answer of In the absence of technological progress,we know...

Question 13

Suppose the economy is initially in the steady state.An increase in the depreciation rate (δ)will cause
A)a reduction in K / N.
B)a reduction in Y / N.
C)a reduction in C / N.
D)all of the above
E)none of the above

Accepted Answer

An increase in the depreciation rate (δ) means that the capital stock will decrease faster as more of it will need to be replaced due to wear and tear. This will result in a reduction in the capital per worker ratio (K/N), which is represented by option A. As a result, the production function will yield less output per worker, reducing the output per worker ratio (Y/N), which is represented by option B. Since the consumption per worker (C/N) is equal to the output per worker minus investment per worker, a reduction in output per worker will result in a reduction in consumption per worker, which is represented by option C. Therefore, all of the above options are correct.

Question 14

Explain what condition must occur for each of the following to occur: (1)the capital stock to increase; (2)the capital stock to decrease; and (3)the capital stock to remain constant.

Accepted Answer

The answer of Explain what condition must occur for each...

Question 15

Which of the following will likely cause an increase in output per worker?
A)an increase in education expenditures
B)an increase in the saving rate
C)an increase in on-the-job training
D)all of the above

Accepted Answer

A) An increase in education expenditures can result in workers having better skills and knowledge, which can increase their productivity.

B) An increase in the saving rate can lead to an increase in the capital stock and, as a result, can lead to an increase in the productivity of workers.

C) An increase in on-the-job training can help workers acquire new skills and knowledge, and can also increase the efficiency of their work processes.

Therefore, all of the above (A, B, and C) can lead to an increase in output per worker.

Question 16

At the current steady state capital-labor ratio,assume that the steady state level of per capita consumption,(C / N)*,is greater than the golden rule level of steady state per capita consumption.Given this information,we can be certain that
A)a reduction in the saving rate will cause a decrease in the steady state level of per capita consumption ((C / N)*).
B)an increase in the capital-labor ratio will cause an increase in (C / N)*.
C)the capital labor ratio will tend to decrease over time.
D)the capital labor ratio will tend to increase over time.
E)a reduction in the saving rate will have an ambiguous effect on (C / N)*.

Accepted Answer

The answer of At the current steady state capital-labor ratio,assume...

Question 17

Suppose the economy is initially in the steady state.A reduction in the depreciation rate (δ)will cause
A)an increase in K / N.
B)an increase in the growth rate in the long run.
C)a reduction in C / N.
D)all of the above

Accepted Answer

A reduction in the depreciation rate (δ) will cause an increase in the capital stock per worker (K/N) in the long run. This is because with lower depreciation, each unit of capital is being "used up" at a slower rate, so more of it can be used to produce output in the future. However, it will not necessarily lead to an increase in the growth rate (B) or a reduction in consumption per worker (C).

Question 18

Suppose there are two countries that are identical in every way with the following exception: Country A has a higher stock of human capital than country B.Given this information,we know with certainty that
A)the growth rate will be higher in A than in B.
B)the growth rate will be the same in the two countries.
C)output per worker will be the same in the two countries.
D)K / N will be higher in B.

Accepted Answer

The answer of Suppose there are two countries that are...

Question 19

Suppose there are two countries that are identical in every way with the following exception: Country A has a lower depreciation rate (δ)than country B.Given this information,we know with certainty that
A)the growth rate will be the same in the two countries.
B)the growth rate will be higher in A than in B.
C)K / N will be higher in B.
D)Y / N will be higher in B.

Accepted Answer

The answer of Suppose there are two countries that are...

Question 20

Suppose the economy is initially in the steady state.A reduction in the depreciation rate (δ)will cause
A)an increase in K / N.
B)an increase in Y / N.
C)an increase in C / N.
D)all of the above
E)none of the above

Accepted Answer

A reduction in the depreciation rate means that capital depreciates more slowly. This leads to an accumulation of capital (K) over time, as it is not being reduced as quickly by depreciation. As a result, the capital-to-labor ratio (K/N) increases because there is more capital available per worker. This increase in capital per worker (K/N) leads to an increase in output per worker (Y/N) due to higher productivity. Finally, with higher output per worker, consumption per worker (C/N) also increases, assuming a portion of the increased output is directed towards consumption. Therefore, all of the statements A, B, and C are correct, making D the correct choice.

Quiz 11: Saving,capital Accumulation,and Output

In the model where it is assumed that the state of technology does not change,what parameters and / or variables cause changes in steady state output per worker.

In the model where it is assumed that the state of technology does not change,what parameters and / or variables cause changes in steady state output per worker?

An increase in the saving rate will NOT affect which of the following variables in the long run?

Suppose the following situation exists for an economy: Kt+1 / N < Kt / N.Given this information,we know that

Based on our understanding of the model presented in chapter 11,which of the following will cause a permanent increase in growth?

The capital-labor ratio will tend to increase over time when

As an economy adjusts to an decrease in the saving rate,we would expect output per worker

Which of the following will likely cause a reduction in output per worker?

Explain the relationship among output,saving,and investment.

In the absence of technological progress,a decrease in the saving rate will cause which of the following?

Suppose there are two countries that are identical in every way with the following exception: Country A has a higher saving rate than country B.Given this information,we know with certainty that

In the absence of technological progress,we know with certainty that an decrease in the saving rate will cause which of the following?

Suppose the economy is initially in the steady state.An increase in the depreciation rate (δ) will cause

Explain what condition must occur for each of the following to occur: (1)the capital stock to increase; (2)the capital stock to decrease; and (3)the capital stock to remain constant.

Which of the following will likely cause an increase in output per worker?

At the current steady state capital-labor ratio,assume that the steady state level of per capita consumption,(C / N) *,is greater than the golden rule level of steady state per capita consumption.Given this information,we can be certain that

Suppose the economy is initially in the steady state.A reduction in the depreciation rate (δ) will cause

Suppose there are two countries that are identical in every way with the following exception: Country A has a higher stock of human capital than country B.Given this information,we know with certainty that

Suppose there are two countries that are identical in every way with the following exception: Country A has a lower depreciation rate (δ) than country B.Given this information,we know with certainty that

Suppose the economy is initially in the steady state.A reduction in the depreciation rate (δ) will cause