Exam 11: Saving, Capital Accumulation and Output

Assume that technological progress does not occur. In Japan, the rate of saving has generally been greater than in the U.S. Given this information, we know that in the long run:

Based on our understanding of the growth model with no technological progress, which of the following will cause a permanent increase in growth?

Suppose an economy experiences a 6% increase in K, N, and H (human capital). Given this information, we know with certainty that:

Assume that technological progress does not occur. Which of the following variables will not change when the economy reaches steady- state equilibrium?

The empirical evidence indicates that most OECD countries are far below their golden- rule level of capital. What are the practical limitations of raising the saving rate closer to the golden- rule level? How close to the golden rule should governments try to get? Why?

The countries with the lowest output per person:

Suppose the saving rate is initially less than the golden rule saving rate. We know with certainty that a decrease in the saving rate will cause:

Suppose the saving rate is initially greater than the golden rule saving rate. We know with certainty that an increase in the saving rate will cause:

Suppose there are two countries that are identical in every way with the following exception: Country A has a lower depreciation rate (6) than country B. Given this information, we know with certainty that:

Suppose the saving rate is initially greater than the golden rule saving rate. We know with certainty that a decrease in the saving rate will cause:

The golden rule level of capital refers to:

Suppose an economy experiences a 5% increase in human capital. We know that this will cause:

Suppose policy makers wish to increase steady state consumption per worker. Explain what must happen to the saving rate to achieve this objective.

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.

Explain the relationship between output, saving, and investment.

For an economy in which there is no technological progress, explain what must occur for the steady state to occur. Also explain what this implies about the rate of growth of output, output per worker, and the capital stock.

With the presence of technological progress, for this economy, we know that the level of output per worker will:

Which of the following are reasons to suspect spending on education might overestimate human capital investment?

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

Suppose an economy experiences a decrease in the saving rate. We know with certainty that this decrease in the saving rate will: