Exam 8: Economic Growth I: Capital Accumulation and Population Growth

Assume that a war reduces a country's labor force but does not directly affect its capital stock. Then the immediate impact will be that:

If the national saving rate increases, the:

In the Solow growth model, the steady-state occurs when:

One of the key distinctions made in the analysis of the Solow growth model is between changes in levels and changes in growth rates. How does an increase in the rate of population growth change the steady-state levels and growth rates of output and output per worker in the Solow model with no technological change?

In an economy with no population growth and no technological change, steady-state consumption is at its greatest possible level when the marginal product of:

If y = k^1/2, the country saves 10 percent of its output each year, and the steady-state level of capital per worker is 4, then the steady-state levels of output per worker and consumption per worker are:

If an economy is in a steady state with no population growth or technological change and the marginal product of capital is less than the depreciation rate:

Assume that a war reduces a country's labor force but does not directly affect its capital stock. If the economy was in a steady state before the war and the saving rate does not change after the war, then, over time, capital per worker will ______ and output per worker will ______ as it returns to the steady state.

In the Solow growth model the saving rate determines the allocation of output between:

In the Solow growth model with population growth, but no technological change, which of the following will generate a higher steady-state growth rate of total output?

Exhibit: The Capital-Labor Ratio In this graph, starting from capital-labor ratio k₁, the capital-labor ratio will:

According to Malthus, large populations:

In the Solow growth model, if investment is less than depreciation, the capital stock will ______ and output will ______ until the steady state is attained.

If the production function exhibits increasing returns to scale in the steady state, an increase in the rate of growth of population would lead to:

Assume that a country's production function is Y = K^1/2L^1/2. a. What is the per-worker production function $y = f ( k )$ ? b. Assume that the country possesses 40,000 units of capital and 10,000 units of abor. What is $Y$ ? What is labor productivity computed from the per-worker production function? Is this value the same as labor productivity computed from the original production function? c. Assume that 10 percent of capital depreciates each year. What gross saving rate is necessaty to make the given capital-labor ratio the steady-state capital-labor ratio? (Hint: In a steady state with no population growth or technological change, the saving rate multiplied by perworker output must equal the depreciation rate multiplied by the capital-labor ratio.) d. If the saving rate equals the steady-state level, what is consumpti on per worker?

According to the Solow growth model, high population growth rates:

To determine whether an economy is operating at its Golden Rule level of capital stock, a policymaker must determine the steady-state saving rate that produces the:

The formula for steady-state consumption per worker (c*) as a function of output per worker and investment per worker is:

In the Solow growth model of Chapter 8, investment equals:

The Malthusian model that predicts mankind will remain in poverty forever: