Exam 25: Long-Run Economic Growth

Consider the long-run theory of investment,saving and growth.For a given level of national income,a decrease in private consumption or government purchases will cause the equilibrium interest rate to

When a new personal computer is purchased to replace an old one,and the new PC is much better and faster than the old one,there has been

Consider a closed economy in the long run.A country with a low national saving rate (as a fraction of real GDP)is likely to have

The table below shows aggregate values for a hypothetical economy.Suppose that this economy has real GDP equal to potential output. TABLE 25-2 -Refer to Table 25-2.What is the level of private saving for this economy?

Consider the market for financial capital in the long run.The investment demand curve is downward sloping because

According to some modern theories of long-run economic growth,successive increments of investment have ________ returns since some fixed costs are ________ for subsequent firms.

An important social cost of economic growth is

In Neoclassical growth theory,increasing the amount of capital employed in production ________ the average standard of living as long as the marginal product of capital exceeds zero.

Consider a closed economy with real GDP in the long run of $400,consumption expenditures of $250,government purchases of $75,and net tax revenue of $20.What is the level of national saving?

The diagram below show the market for financial capital assuming that national income is constant at potential GDP,Y*. FIGURE 25-2 -Refer to Figure 25-2.Suppose national saving is reflected by NS 0 and investment demand is reflected by I0D.Now suppose the government implements a revenue-neutral tax policy that encourages investment.What is the effect on the real interest rate?

Consider the market for financial capital in the long run.The national saving curve is upward sloping because an increase in the real interest rate

The theory of economic growth concentrates on the ________ over the long run, not on ________.

Consider the Neoclassical growth model.The effect of an increase in population (or the labour force)in an economy,with everything else held constant,is

In Neoclassical growth theory,average material living standards in an economy could fall when

Suppose the government has a budget surplus of $2 billion.If the countryʹs level of private saving is $1.2 billion,then national saving must be

The table below shows various values of labour (L),capital (K),and technology (T)for Economies A,B,and C.In each case,the aggregate production function takes the following form: TABLE 25-4 -Refer to Table 25-4.The production function that applies to Economies A,B,and C displays

Consider the long-run theory of investment,saving,and growth.For a given level of national income,a decrease in private consumption or government purchases will cause the equilibrium interest rate to

The table below shows aggregate values for a hypothetical economy.Suppose that this economy has real GDP equal to potential output. TABLE 25-3 -Refer to Table 25-3.What is the level of national saving for this economy?

Consider the long-run theory of investment,saving and growth.In the long-run version of our macro model (with real GDP equal to Y*),the equilibrium interest rate is determined where

The diagram below show the market for financial capital assuming that national income is constant at potential GDP,Y*. FIGURE 25-2 -Refer to Figure 25-2.Suppose national saving is reflected by NS 0 and investment demand is reflected by I0D.Now suppose the government implements a revenue-neutral tax policy that encourages investment.What is the effect on the quantity of national saving?