Consider the Solow growth model with no population growth and no tech- nology growth, i.e., n = x = 0. Output is created by a Cobb-Douglas pro- duction function combining Labor, Lt, and capital, Kt, such that output Yt is given by Y₁ = A+ KL-a Recall that, without population growth, Lt = = = Ao and Lo and assume that Lo 10. Furthermore, recall that, without technology growth, At assume that A0 = 2. Assume that the savings rate is s = 0.2, the depre- Ao ciation rate is = 0.1, and that the capital share is a = 0.3. A lower case letter denotes a variable in per capita. For example, kt: Kt/Lt. In the : = following questions, choose the closest number. What is the value of kss? (a) 72 (b) 27 (c) 7.2 (d) 2.7

On the following scatter plots, the 1960 real per capita GDP is on the x-axis and the y-axis represents the average economic growth rate between 1960 and 2017. Which one shows the strongest evidence in favour of convergence? O 2.5 1960-2017 growth (percent) 2.0 1.5 1.0 3 2 5 5 Convergence 10 1960 GDP (constant dollars per person) Convergence 15 10 15 1960 GDP (constant dollars per person) 20 20

"Consider the simple production model studied in class, but with different exponents. Suppose that the production function is Cobb-Douglas. The exponent on capital is 0.1 and the exponent on labor is 0.9. The data for this economy is A=10, KO=300 and the initial population is LO-30. We will assume that everyone in this country works so that population equals employment and per-person GDP equals per-worker GDP. Now suppose that the country receives foreign aid that is used to invest in infrastructure and electric vehicles. As a result, over the next few years, the economyos capital stock doubles to K1=600. Fortunately, no one is killed during the hurricane. In the Capital market the Demand will and the Supply will As a result, the rental rate will Shift to the Right; Remain unaffected; Increase Shift to the Left; Remain unaffected; Fall Shift to the Left; Shift to the Right; Fall Remain unaffected; Shift to the Right; Fall

If Real GDP was $9,542 billion in year 2 and it had been $9,300 billion in year 1, what was the approximate economic growth rate during this time period? Select one: O a. 9.7 percent O b. 2.4 percent O c. 3.5 percent O d. 2.6 percent

The GDP at Q101 is 250600 and the GDP at Q102 is 260700. What is the total GDP growth between Q101 and Q102? Select one: O a. 4% O b.2.9% O C8.27% O d. None O e. 6.15%

Last year real GDP in the imaginary nation of Oceania was 561.0 billion and the population was 2.2 million. The year before, real GDP was 500.0 billion and the population was 2.0 million. What was the growth rate of real GDP per person during the year? O 12% O 10% O 4% 2%

According to the text, European countries' growth rates of real GDP per capita Select one: O a. decreased in the first two decades after 1980 and then increased in the following two decades. O b. decreased during each of the four decades beginning 1980. O c. followed a random pattern during the four decades beginning 1980. O d. remained constant during each of the four decades beginning 1980.

A more realistic version of convergence is conditional convergence, which tells us that: O a. Different countries will end up with different technologies, population growth rates, etc., but nonetheless have the same steady-state levels of capital per worker and output per worker. b. None of the other choices is correct. All poor countries will eventually catch up to richer countries, albeit very slowly. O d. Because countries have differing characteristics (population growth, saving rate, etc.), they will approach different steady-state levels of output per worker.

In the Solow model with technological progress, suppose that the rate of depreciation is 10% per year, the population growth rate is 2% per year, and the growth rate of technology is 3% per year. Which of the following equals the annual growth rate of "effective labor" in the steady state in this economy? O 2% O 3% O 5% 10%

QUESTION 11 Using the Rule of 70, a country will roughly double its GDP in thirty-five years if its annual growth rate is However, if its annual growth rate is 5%, its GDP will roughly double in O 2 percent; 14 years O 7.5 percent; 10 years O 3.5 percent; 5 years O 2.5 percent; 25 years