Question 1

The production function used in the Solow model is:

Accepted Answer

A)    . 
B)    . 
C)    . 
D)    . 
E)    . 
A)    . 
B)    . 
C)    . 
D)    . 
E)    . C

Question 2

What are the key assumptions of the Solow growth model?

Accepted Answer

The key assumptions are:
• constant returns to scale production function;
• the savings and depreciation rates are exogenous;
• a closed economy;
• output is divided between consumption and investment goods;
• total factor productivity is exogenous.

Question 3

On average,if both rich and poor countries grow at the same rate,this suggests that:

Accepted Answer

A) most countries are contracting. 
B) most countries still are growing. 
C) no countries have reached their steady state. 
D) most countries have reached their steady state. 
E) most countries are unproductive. 
A) most countries are contracting. 
B) most countries still are growing. 
C) no countries have reached their steady state. 
D) most countries have reached their steady state. 
E) most countries are unproductive. D

Question 4

The key insight in the Solow model is that:

Accepted Answer

A) saving rates are determined in a particular manner. 
B) savings have no impact on economic growth. 
C) capital depreciation enhances economic growth. 
D) the relationship between capital and output is static. 
E) capital accumulation contributes to economic growth. 
A) saving rates are determined in a particular manner. 
B) savings have no impact on economic growth. 
C) capital depreciation enhances economic growth. 
D) the relationship between capital and output is static. 
E) capital accumulation contributes to economic growth.

Question 5

The Solow model assumes the saving rate is:

Accepted Answer

A) zero. 
B) constant. 
C) decreasing as income increases. 
D) increasing as income increases. 
E) larger as the interest rate rises. 
A) zero. 
B) constant. 
C) decreasing as income increases. 
D) increasing as income increases. 
E) larger as the interest rate rises.

Question 6

In the Solow model,the __________ plays a __________ role than it does in the standard production function model.

Accepted Answer

A) labor supply;larger 
B) productivity parameter;larger 
C) capital stock;larger 
D) capital stock;smaller 
E) productivity parameter;smaller 
A) labor supply;larger 
B) productivity parameter;larger 
C) capital stock;larger 
D) capital stock;smaller 
E) productivity parameter;smaller

Question 7

Using the Solow model,if,in time t = 50,the capital stock is  
,investment is  
,and  
Is the depreciation rate,capital accumulation is

Accepted Answer

A)    . 
B)    . 
C)    . 
D)    . 
E)    . 
A)    . 
B)    . 
C)    . 
D)    . 
E)    .

Question 8

In the steady state,capital accumulation is zero.

Accepted Answer

A) True 
 B)False

Question 9

In the Solow model,the steady-state level of output per worker is a function of:

Accepted Answer

A) productivity. 
B) the initial capital stock,productivity,and the saving rate. 
C) the initial capital stock,productivity,and the depreciation rate. 
D) the initial capital stock and the steady-state level of capital stock. 
E) productivity,the depreciation rate,and the saving rate. 
A) productivity. 
B) the initial capital stock,productivity,and the saving rate. 
C) the initial capital stock,productivity,and the depreciation rate. 
D) the initial capital stock and the steady-state level of capital stock. 
E) productivity,the depreciation rate,and the saving rate.

Question 10

According to the Solow model,in the steady state,countries with high savings rates should have a:

Accepted Answer

A) low labor-output ratio. 
B) low capital-output ratio. 
C) high capital-output ratio. 
D) high depreciation rate. 
E) none of the above 
A) low labor-output ratio. 
B) low capital-output ratio. 
C) high capital-output ratio. 
D) high depreciation rate. 
E) none of the above

Question 11

Assume two economies are identical in every way except that one has a higher saving rate.According to the Solow growth model,in the steady state,the country with the higher saving rate will have __________ level of total output and __________ rate of growth of output as (than)the country with the lower saving rate.

Accepted Answer

A) a higher;a higher 
B) a higher;the same 
C) a lower;a higher 
D) a higher;a lower 
E) the same;the same 
A) a higher;a higher 
B) a higher;the same 
C) a lower;a higher 
D) a higher;a lower 
E) the same;the same

Question 12

In the Solow model,the equation of capital accumulation is   
.

Accepted Answer

A) True 
 B)False

Question 13

In the Solow model,we generally assume that the capital depreciation rate is the same across all countries.

Accepted Answer

A) True 
 B)False

Question 14

In the Solow model,the steady-state capital stock is a function of:

Accepted Answer

A) productivity. 
B) the initial capital stock,productivity,and the saving rate. 
C) the initial capital stock,productivity,and the depreciation rate. 
D) the labor stock and the steady-state level of capital stock. 
E) productivity,the depreciation rate,the labor stock,and the savings rate. 
A) productivity. 
B) the initial capital stock,productivity,and the saving rate. 
C) the initial capital stock,productivity,and the depreciation rate. 
D) the labor stock and the steady-state level of capital stock. 
E) productivity,the depreciation rate,the labor stock,and the savings rate.

Question 15

In the steady state,gross investment is less than capital depreciation.

Accepted Answer

A) True 
 B)False

Question 16

Given a production function   
,if   
,   
,   
,and   
,
(a)calculate the steady-state level of capital.
(b)does the above production function exhibit constant returns to scale? Or does it exhibit diminishing marginal returns? Explain,including defining the difference between these two concepts.

Accepted Answer

(a)The steady-state level of capital is

Question 17

The amount of capital in an economy is a (an)__________,while the amount of investment is a (an)__________.

Accepted Answer

A) flow;stock 
B) stock;flow 
C) final good;intermediate good 
D) intermediate good;final good 
E) none of the above 
A) flow;stock 
B) stock;flow 
C) final good;intermediate good 
D) intermediate good;final good 
E) none of the above

Question 18

For which of the following does the Solow model not provide adequate explanations?

Accepted Answer

A) why saving rates differ across countries 
B) the cause of productivity differences across countries 
C) why population growth rates differ across countries 
D) what causes long-term economic growth 
E) all of the above 
A) why saving rates differ across countries 
B) the cause of productivity differences across countries 
C) why population growth rates differ across countries 
D) what causes long-term economic growth 
E) all of the above

Question 19

-Consider the Solow model exhibited in Figure 5.3.
Which of the following is (are)true?
i.For any single country,the movement from point a to b is due to an increase in the saving rate,  
)
ii.For any single country,the movement from point c to b is due to an increase in capital stock for the saving rate  
)
iii.If  
Stands for the saving rates in Countries 1 and 2,respectively,Country 2 has a lower saving rate.

Accepted Answer

A) i 
B) ii 
C) iii 
D) i and ii 
E) i,ii,and iii 
A) i 
B) ii 
C) iii 
D) i and ii 
E) i,ii,and iii

Question 20

Using the Solow model,if,in time t = 0,the initial capital stock is  
,investment is  
,and  
Is the depreciation rate,capital accumulation is:

Accepted Answer

A)    . 
B)    . 
C)    . 
D)    . 
E)    . 
A)    . 
B)    . 
C)    . 
D)    . 
E)    .

The production function used in the Solow model is:

What are the key assumptions of the Solow growth model?

On average,if both rich and poor countries grow at the same rate,this suggests that:

The key insight in the Solow model is that:

The Solow model assumes the saving rate is:

In the Solow model,the plays a role than it does in the standard production function model.

Using the Solow model,if,in time t = 50,the capital stock is ,investment is ,and Is the depreciation rate,capital accumulation is

In the steady state,capital accumulation is zero.

In the Solow model,the steady-state level of output per worker is a function of:

According to the Solow model,in the steady state,countries with high savings rates should have a:

Assume two economies are identical in every way except that one has a higher saving rate.According to the Solow growth model,in the steady state,the country with the higher saving rate will have level of total output and rate of growth of output as (than)the country with the lower saving rate.

In the Solow model,the equation of capital accumulation is .

In the Solow model,we generally assume that the capital depreciation rate is the same across all countries.

In the Solow model,the steady-state capital stock is a function of:

In the steady state,gross investment is less than capital depreciation.

Given a production function ,if , , ,and , (a)calculate the steady-state level of capital. (b)does the above production function exhibit constant returns to scale? Or does it exhibit diminishing marginal returns? Explain,including defining the difference between these two concepts.

The amount of capital in an economy is a (an),while the amount of investment is a (an).

For which of the following does the Solow model not provide adequate explanations?

Using the Solow model,if,in time t = 0,the initial capital stock is ,investment is ,and Is the depreciation rate,capital accumulation is:

Introduction to Macroeconomics

Measuring the Macroeconomy

An Overview of Long- Run Economic Growth

A Model of Production

Growth and Ideas

The Labor Market,wages,and Unemployment

Inflation

An Introduction to the Short Run

The Great Recession: a First Look

The Is Curve

Monetary Policy and the Phillips Curve

Stabilization Policy and the Asad Framework

The Great Recession and the Short-Run Model

Consumption

Investment

The Government and the Macroeconomy

International Trade

Exchange Rates and International Finance

Parting Thoughts

Filters

Exam 5: The Solow Growth Model

The production function used in the Solow model is:

What are the key assumptions of the Solow growth model?

On average,if both rich and poor countries grow at the same rate,this suggests that:

The key insight in the Solow model is that:

The Solow model assumes the saving rate is:

In the Solow model,the __________ plays a __________ role than it does in the standard production function model.

Using the Solow model,if,in time t = 50,the capital stock is ,investment is ,and Is the depreciation rate,capital accumulation is

In the steady state,capital accumulation is zero.

In the Solow model,the steady-state level of output per worker is a function of:

According to the Solow model,in the steady state,countries with high savings rates should have a:

In the Solow model,the equation of capital accumulation is .

In the Solow model,we generally assume that the capital depreciation rate is the same across all countries.

In the Solow model,the steady-state capital stock is a function of:

In the steady state,gross investment is less than capital depreciation.

Given a production function ,if , , ,and , (a)calculate the steady-state level of capital. (b)does the above production function exhibit constant returns to scale? Or does it exhibit diminishing marginal returns? Explain,including defining the difference between these two concepts.

The amount of capital in an economy is a (an)__________,while the amount of investment is a (an)__________.

For which of the following does the Solow model not provide adequate explanations?

Using the Solow model,if,in time t = 0,the initial capital stock is ,investment is ,and Is the depreciation rate,capital accumulation is:

Introduction to Macroeconomics

Measuring the Macroeconomy

An Overview of Long- Run Economic Growth

A Model of Production

Growth and Ideas

The Labor Market,wages,and Unemployment

Inflation

An Introduction to the Short Run

The Great Recession: a First Look

The Is Curve

Monetary Policy and the Phillips Curve

Stabilization Policy and the Asad Framework

The Great Recession and the Short-Run Model

Consumption

Investment

The Government and the Macroeconomy

International Trade

Exchange Rates and International Finance

Parting Thoughts

Filters

In the Solow model,the plays a role than it does in the standard production function model.

The amount of capital in an economy is a (an),while the amount of investment is a (an).