Question 1

Among OECD countries, there is ________ correlation between how poor a country was in 1960 and how fast it ________ from 1960 to 2010.

Accepted Answer

A)  almost no; grew 
B)  a strong; grew 
C)  a strong positive; contracted 
D)  a strong negative; contracted 
E)  almost no; contracted 
A)  almost no; grew 
B)  a strong; grew 
C)  a strong positive; contracted 
D)  a strong negative; contracted 
E)  almost no; contracted

Question 2

In the Solow model, with population growth:

Accepted Answer

A)  there is no steady state in output per person 
B)  the economy never settles down to a steady state and exhibits growth in output per person 
C)  the economy eventually settles down to a steady state in output per person 
D)  the economy eventually settles down to a steady state with no growth in aggregate output 
E)  None of these answers are correct. 
A)  there is no steady state in output per person 
B)  the economy never settles down to a steady state and exhibits growth in output per person 
C)  the economy eventually settles down to a steady state in output per person 
D)  the economy eventually settles down to a steady state with no growth in aggregate output 
E)  None of these answers are correct.

Question 3

Capital accumulation is a(n):

Accepted Answer

A)  stock 
B)  flow 
C)  final good 
D)  intermediate good 
E)  None of these answers are correct. 
A)  stock 
B)  flow 
C)  final good 
D)  intermediate good 
E)  None of these answers are correct.

Question 4

The steady state is defined as the point where capital accumulation, $\Delta$Kt, is equal to:

Accepted Answer

A)  the saving rate 
B)  zero 
C)  the depreciation rate 
D)  the productivity growth rate 
E)  the population growth rate 
A)  the saving rate 
B)  zero 
C)  the depreciation rate 
D)  the productivity growth rate 
E)  the population growth rate

Question 5

Show the transition dynamics in the Solow model if $\bar { s } Y _ { t } < \bar { d } K _ { t }$  .

Accepted Answer

We will begin with @#LAT-DLM& . The capi

Question 6

The steady-state level of output per worker in the Solow model, with the production function $Y = \bar { A } K _ { t } ^ { 1 / 3 } \bar { L } ^ { 2 / 3 }$ , is given by:

Accepted Answer

A)  $y ^ { * } = \bar { A } \left( \frac { \bar { s } } { \bar { d } } \right) ^ { 1 / 2 }$ 
B)  $$y ^ { * } = \bar { A } ^ { 3 / 2 } \left( \frac { \bar { d } } { \bar { s } } \right) ^ { 1 / 2 } \bar { L }$$ 
C)  $y ^ { * } = \bar { A } ^ { 3 / 2 } \left( \frac { \bar { s } } { \bar { d } } \right) ^ { 1 / 2 } \bar { L }$ 
D)  $y ^ { * } = \bar { A } ^ { 3 / 2 } \left( \frac { \bar { s } } { \bar { d } } \right) ^ { 1 / 2 }$ 
E)  $y ^ { * } = \bar { A } \left( \frac { \bar { s } } { \bar { d } } \right) ^ { 1 / 3 }$ 
A)  $y ^ { * } = \bar { A } \left( \frac { \bar { s } } { \bar { d } } \right) ^ { 1 / 2 }$ 
B)  $$y ^ { * } = \bar { A } ^ { 3 / 2 } \left( \frac { \bar { d } } { \bar { s } } \right) ^ { 1 / 2 } \bar { L }$$ 
C)  $y ^ { * } = \bar { A } ^ { 3 / 2 } \left( \frac { \bar { s } } { \bar { d } } \right) ^ { 1 / 2 } \bar { L }$ 
D)  $y ^ { * } = \bar { A } ^ { 3 / 2 } \left( \frac { \bar { s } } { \bar { d } } \right) ^ { 1 / 2 }$ 
E)  $y ^ { * } = \bar { A } \left( \frac { \bar { s } } { \bar { d } } \right) ^ { 1 / 3 }$

Question 7

Refer to the following figure when answering

Figure 5.1: Solow Diagram  
-In Figure 5.1, if the economy begins with the initial capital stock at K2, the capital stock will ________ and the economy will ________.

Accepted Answer

A)  decrease; grow 
B)  increase; grow 
C)  stay constant; be in its steady state 
D)  stay constant; shrink 
E)  stay constant; grow 
A)  decrease; grow 
B)  increase; grow 
C)  stay constant; be in its steady state 
D)  stay constant; shrink 
E)  stay constant; grow

Question 8

A surprising result of the Solow model is that capital accumulation cannot serve as the engine of growth in the long run.

Accepted Answer

A) True 
 B)False

Question 9

The Solow model of economic growth endogenizes investment.

Accepted Answer

A) True 
 B)False

Question 10

Refer to the following figure when answering 
Figure 5.3: Solow Diagram  
-In Figure 5.3, at K2, capital accumulation is ________, the economy is ________, and consumption is ________.

Accepted Answer

A)  positive; growing; positive 
B)  zero; in the steady state; zero 
C)  negative; growing; positive 
D)  zero; in the steady state; positive 
E)  zero; contracting; negative 
A)  positive; growing; positive 
B)  zero; in the steady state; zero 
C)  negative; growing; positive 
D)  zero; in the steady state; positive 
E)  zero; contracting; negative

Question 11

Immediately following the increase in the saving rate, output grows rapidly. As the economy approaches its new steady state:

Accepted Answer

A)  the growth rate gradually increases 
B)  the growth rate gradually declines 
C)  the growth rate is constant 
D)  the growth rate is negative 
E)  None of these answers are correct. 
A)  the growth rate gradually increases 
B)  the growth rate gradually declines 
C)  the growth rate is constant 
D)  the growth rate is negative 
E)  None of these answers are correct.

Question 12

Among the OECD countries, those that were relatively ________ in 1960 ________ between 1960 and 2010.

Accepted Answer

A)  poor; grew slowly 
B)  rich; grew quickly 
C)  poor; grew quickly 
D)  rich; did not grow 
E)  poor; did not grow 
A)  poor; grew slowly 
B)  rich; grew quickly 
C)  poor; grew quickly 
D)  rich; did not grow 
E)  poor; did not grow

Question 13

In the Solow model, if a country's saving rate increases, the country:

Accepted Answer

A)  moves from a relatively low steady state to one that is lower 
B)  moves from a relatively low steady state to one that is higher 
C)  moves from a relatively high steady state to one that is lower 
D)  stays at a constant high steady state 
E)  stays at a constant low steady state 
A)  moves from a relatively low steady state to one that is lower 
B)  moves from a relatively low steady state to one that is higher 
C)  moves from a relatively high steady state to one that is lower 
D)  stays at a constant high steady state 
E)  stays at a constant low steady state

Question 14

The analysis of how an economy approaches the steady state is called:

Accepted Answer

A)  investment 
B)  economic growth 
C)  transition dynamics 
D)  saving 
E)  depreciation 
A)  investment 
B)  economic growth 
C)  transition dynamics 
D)  saving 
E)  depreciation

Question 15

Suppose that rather than the Cobb-Douglas production function being given as $Y _ { t } = \bar { A } K _ { t } ^ { 1 / 3 } \bar { L } ^ { 2 / 3 }$  , it is given by $Y _ { t } = \bar { A } K _ { t } ^ { a } \bar { L } ^ { 1 - a } , a < 1$ 
. Find the steady-state level of capital and output in the Solow model.

Accepted Answer

In the steady state

Question 16

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

Accepted Answer

A)  productivity and the initial capital stock 
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 and the initial capital stock 
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 17

Immediately following the increase in the investment rate, output grows rapidly. As the economy approaches its new steady state, the growth rate gradually declines.

Accepted Answer

A) True 
 B)False

Question 18

In the Solow model, if capital is in the steady state, output:

Accepted Answer

A)  will continue to grow 
B)  is also in the steady state 
C)  will continue to grow, but its rate of growth will slow down 
D)  will decline, but its rate of growth will be positive 
E)  will begin to contract 
A)  will continue to grow 
B)  is also in the steady state 
C)  will continue to grow, but its rate of growth will slow down 
D)  will decline, but its rate of growth will be positive 
E)  will begin to contract

Question 19

The key difference between the Solow and production models is that the Solow model endogenizes the saving rate.

Accepted Answer

A) True 
 B)False

Question 20

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

Accepted Answer

A)  productivity and the initial capital stock 
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 saving rate 
A)  productivity and the initial capital stock 
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 saving rate

Among OECD countries, there is correlation between how poor a country was in 1960 and how fast it from 1960 to 2010.

In the Solow model, with population growth:

Capital accumulation is a(n):

The steady state is defined as the point where capital accumulation, $\Delta$ K_t, is equal to:

Show the transition dynamics in the Solow model if $\bar { s } Y _ { t } < \bar { d } K _ { t }$ .

The steady-state level of output per worker in the Solow model, with the production function $Y = \bar { A } K _ { t } ^ { 1 / 3 } \bar { L } ^ { 2 / 3 }$ , is given by:

Refer to the following figure when answering Figure 5.1: Solow Diagram -In Figure 5.1, if the economy begins with the initial capital stock at K₂, the capital stock will and the economy will .

A surprising result of the Solow model is that capital accumulation cannot serve as the engine of growth in the long run.

The Solow model of economic growth endogenizes investment.

Refer to the following figure when answering Figure 5.3: Solow Diagram -In Figure 5.3, at K₂, capital accumulation is , the economy is , and consumption is .

Immediately following the increase in the saving rate, output grows rapidly. As the economy approaches its new steady state:

Among the OECD countries, those that were relatively in 1960 between 1960 and 2010.

In the Solow model, if a country's saving rate increases, the country:

The analysis of how an economy approaches the steady state is called:

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

Immediately following the increase in the investment rate, output grows rapidly. As the economy approaches its new steady state, the growth rate gradually declines.

In the Solow model, if capital is in the steady state, output:

The key difference between the Solow and production models is that the Solow model endogenizes the saving rate.

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

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

Dsge Models: the Frontier of Business Cycle Research

Consumption

Investment

The Government and the Macroeconomy

International Trade

Exchange Rates and International Finance

Parting Thoughts

Filters

Exam 5: The Solow Growth Model

Among OECD countries, there is ________ correlation between how poor a country was in 1960 and how fast it ________ from 1960 to 2010.

In the Solow model, with population growth:

Capital accumulation is a(n):

The steady state is defined as the point where capital accumulation, Δ\DeltaΔ Kt, is equal to:

Show the transition dynamics in the Solow model if sˉYt<dˉKt\bar { s } Y _ { t } < \bar { d } K _ { t }sˉYt​<dˉKt​ .

The steady-state level of output per worker in the Solow model, with the production function Y=AˉKt1/3Lˉ2/3Y = \bar { A } K _ { t } ^ { 1 / 3 } \bar { L } ^ { 2 / 3 }Y=AˉKt1/3​Lˉ2/3 , is given by:

Refer to the following figure when answering Figure 5.1: Solow Diagram -In Figure 5.1, if the economy begins with the initial capital stock at K2, the capital stock will ________ and the economy will ________.

A surprising result of the Solow model is that capital accumulation cannot serve as the engine of growth in the long run.

The Solow model of economic growth endogenizes investment.

Refer to the following figure when answering Figure 5.3: Solow Diagram -In Figure 5.3, at K2, capital accumulation is ________, the economy is ________, and consumption is ________.

Immediately following the increase in the saving rate, output grows rapidly. As the economy approaches its new steady state:

Among the OECD countries, those that were relatively ________ in 1960 ________ between 1960 and 2010.

In the Solow model, if a country's saving rate increases, the country:

The analysis of how an economy approaches the steady state is called:

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

Immediately following the increase in the investment rate, output grows rapidly. As the economy approaches its new steady state, the growth rate gradually declines.

In the Solow model, if capital is in the steady state, output:

The key difference between the Solow and production models is that the Solow model endogenizes the saving rate.

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

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

Dsge Models: the Frontier of Business Cycle Research

Consumption

Investment

The Government and the Macroeconomy

International Trade

Exchange Rates and International Finance

Parting Thoughts

Filters

Among OECD countries, there is correlation between how poor a country was in 1960 and how fast it from 1960 to 2010.

The steady state is defined as the point where capital accumulation, $\Delta$ K_t, is equal to:

Show the transition dynamics in the Solow model if $\bar { s } Y _ { t } < \bar { d } K _ { t }$ .

The steady-state level of output per worker in the Solow model, with the production function $Y = \bar { A } K _ { t } ^ { 1 / 3 } \bar { L } ^ { 2 / 3 }$ , is given by:

Refer to the following figure when answering Figure 5.1: Solow Diagram -In Figure 5.1, if the economy begins with the initial capital stock at K₂, the capital stock will and the economy will .

Refer to the following figure when answering Figure 5.3: Solow Diagram -In Figure 5.3, at K₂, capital accumulation is , the economy is , and consumption is .

Among the OECD countries, those that were relatively in 1960 between 1960 and 2010.