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ECO 302 Week 4 QuizECO/302 Week 4 Quiz

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ECO 302 Week 4 Quiz Strayer

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Chapter 4 and 5

Chapter 4

TRUE/FALSE

1.An increase in the depreciation rate affects the steady-state capital per worker the same way as an increase in the population growth rate.

2.If the saving rate increases, then the optimum level of capital per worker falls.

3.An increase in technology causes the optimum level of capital per worker to rise in the long run or steady state.

4.An increase in technology causes the real GDP per worker to increase during the transition to the steady-state.

5.An increase in technology cause the growth in real output per worker to be higher in the long run or steady-state.

6.An increase in the saving rate causes the growth in real output per worker to be lower in the long run or steady-state.

7.The Solow model of growth says that poorer economies should over time converge towards richer ones in terms of real output put worker.

8.In the long run or steady state of the Solow model, the growth rate of capital per worker is higher with a higher saving rate.

9.An increase in the population growth rate in the Solow model causes the growth in output per worker to be higher in the long run or steady-state.

10.An increase in the population growth rate in the Solow model causes output per worker to be lower in the long run or steady-state.

MULTIPLE CHOICE

1.In the revised version of the Solow growth model the optimal level of capital stock per worker depends on:a.the saving rating.c.population growth rate. b.the depreciation rate.d.all of the above.

2.In the revised version of the Solow growth model the optimal level of the capital stock per worker depends on:a.monetary growth. c.the saving rate.b.government spending. d.all of the above.

3.In the revised version of the Solow growth model the optimal level of the capital stock per worker depends on:a.monetary growth. c.appreciation in the stock market. b.the depreciation rate. d.all of the above.

4.In the revised version of the Solow growth model the optimal level of the capital stock per worker depends on:a.the population growth rate. c.inflation. b.government spending. d.all of the above.

5.In the Solow growth model as a growing economy transitions to the steady state:a.the average product of capital falls. c.the average product of labor falls. b.output per worker is constant.d.the growth rate of capital is equal to zero.

6.In the Solow growth model in the steady state the growth rate of capital per worker, k*, is:a.rising.c.fluctuating.b.falling. d.zero.

7.In the Solow growth model, if technology, A, improves, then in the steady state:a.output per worker grows faster. c.capital per worker grows faster. b.output per worker grows at the same rate, zero. d.all of the above.

8.In the Solow growth model, if the population growth rate, n, increases, then in the steady state:a.output per worker grows slower. c.capital per worker grows at the same rate, zero.b.capital per worker grows slower.d.all of the above.

9.In the Solow growth model, if the depreciation rate, , increases, then in the steady state:a.output per worker grows at the same rate, zero. c.capital per worker grows faster. b.output per worker grows faster.d.all of the above.

10.In the Solow growth model, if labor input, L(0), increases, then in the steady state:a.output per worker grows faster. c.capital per worker grows faster. b.capital per worker grows at the same rate, zero. d.all of the above.

11.In the Solow growth model in the steady state the growth rate of output per worker, y*, is:a.rising.c.constant at zero.b.falling. d.fluctuating.

12.If the saving rate increases in the Solow growth model, then during the transition to the steady state: a.the growth rate of capital per worker will increase.c.the growth rate of capital per worker is constant.b.the growth rate of capital per worker will decrease.d.the growth rate of capital per worker is zero.

13.If the saving rate increases in the Solow growth model, then in the steady state the growth rate of capital per worker is: a.constant.c.zero.b.unchanged.d.all of the above.

14.If the saving rate increases in the Solow growth model, then in the steady state the growth rate of capital per worker is: a.higher.c.lower.b.unchanged.d.rising.

15.If the level of technology increases in the Solow growth model, then in the steady state, the growth rate of capital per worker is: a.higher.c.lower.b.unchanged.d.rising.

16.If the saving rate increases in the Solow growth model, then in the steady state:a.capital per worker and the growth of capital will be higher. c.capital per worker will be higher but the growth rate of capital will be lower. b.capital per worker will be higher but the growth rate of capital will remain the same at zero. d.capital per worker will be lower but the growth rate of capital will be higher.

17.If the level of technology increases in the Solow growth model, then in the steady statea.capital per worker and the growth of capital will be higher. c.capital per worker will be higher but the growth rate of capital will be lower. b.capital per worker will be higher but the growth rate of capital will remain the same at zero. d.capital per worker will be lower but the growth rate of capital will be higher.

18.If the level of technology increases in the Solow growth model, then in the steady statea.capital per worker will be higher. c.the growth rate of capital will be lower. b.saving per worker will be higher. d.capital per worker will be the same.

19.If the level of technology increases in the Solow growth model, then in the steady statea.capital per worker will be higher. c.the growth rate of capital will be lower. b.output per worker will be higher. d.both (a) and (b).

20.If the saving rate increases in the Solow growth model, then in the steady statea.capital per worker will be higher. c.the growth rate of capital will be zero. b.output per worker will be higher. d.all of the above.

21.If the level of technology increases in the Solow growth model, then in the steady statea.output per worker will be higher. c.the growth rate of capital will be zero. b.capital per worker will be higher. d.all of the above.

22.In the Solow growth model during the transition an increase in technology:a.lowers the growth rate of capital per worker. c.raises the growth rate of capital per worker.b.does not change the growth rate of capital per worker. d.causes the growth rate of capital to fall to zero per worker.

23.In the Solow growth model during the transition an increase in technology:a.lowers the growth rate of output per worker. c.raises the growth rate of output per worker. b.does not change the growth rate of output per worker. d.causes the growth rate of output per worker to fall to zero.

24.In the Solow growth model during the transition an increase in technology:a.lowers the growth rate of capital and output per worker.c.raises the growth rate of capital and output per worker.b.raises the growth rate of capital per worker and lowers the growth rate of output per worker.d.lowers the growth rate of capital per worker and raises the growth rate of output per worker.

25.In the Solow growth model in the short run, an increase in the labor input L(0):a.increases the growth rate of real output per worker. c.reduces the growth rate of capital per worker. b.increases s(y/k). d.decreases s + n.

26.In the Solow growth model in the short run, an increase in the labor input L(0), a.decrease the growth rate of real output per worker. c.increase the growth rate of capital per worker. b.increases s(y/k). d.decrease s + n.

27.In the Solow growth model in the long run or steady state, an increase in the labor input L(0) will, a.increase the capital stock. c.not affect real output per worker.b.lead to a growth of the capital stock per worker of zero.d.all of the above.

28.In the Solow growth model in the long run or steady state, an increase in the labor input L(0) will, a.decrease the capital stock. c.not change real output per worker.b.lead to a positive growth of the capital stock per worker.d.all of the above.

Figure 4.1

Determinants of k/k

29.In Figure 4.1 the distance between s(y/k) and s + n is the growth of capital per worker:a.in the transition.c.in the steady state.b.in the long-run. d.none of the above.

30.In Figure 4.1 if the saving rate increases, thena.the curve s + n increases.c.the curve s + n decreases.b.the curve s + n becomes steeper. d.the curve s + n becomes flatter.

31.In Figure 4.1, if the saving rate increase, then:a.s(y/k) increases. c.s(y/k) decreases. b.s(y/k) gets steeper.d.s(y/k) becomes vertical.

32.In Figure 4.1, if the saving rate increase, then:a.s(y/k) and s + n increase.c.s(y/k) and s + n decrease. b.s(y/k) increases while s + n decreases. d.s(y/k) decreases while s + n increase.

33.In Figure 4.1, if the technology improves, then:a.s(y/k) increases. c.s(y/k) decreases. b.s + n increases.d.s + n decreases.

34.In Figure 4.1, if the initial amount of labor increases, then:a.s(y/k) increases.c.s + n increases.b.K/L moves away from the optimum.d.the growth rate of population increases.

35.In Figure 4.1, if the initial amount of labor increases, then in the steady state:a.the growth rate of capital per worker increases. c.the growth rate of output per worker is the same. b.the growth rate of output per worker rises. d.the population growth rate rises.

36.In Figure 4.1, if the initial amo

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