In the Solow growth model, if the economy's actual capital stock per worker is greater than the steady-state capital stock per worker, growth from convergence O A. detracts from the overall growth of the economy until the steady state is attained. O B. complicates the growth process and creates uncertainty regarding the overall growth of the economy. OC. adds to the overall growth of the economy until the steady state is attained. O D. neither adds to nor detracts from the overall growth of the economy.

In the Solow growth model, what two things (lines/equations) are equalin steady state? Explain all of the variables and the logic of why this is asteady state

In the Solow growth model without population growth and technological progress, consumption per worker will be maximized in the steady state when: (1) Output per worker is maximized. (ii) Investment per worker is maximized. (iii) The marginal product of capital equals the depreciation rate. O a. (i), (ii), and (ii) O b. Only (iii) O c. Only (ii) Od. Only (1)

What is the mechanism in the Solow model that generates growth? Why isthis an appealing mechanism? Why does it fail to deliver economic growth inthe long run?

If real GDP per capita is increasing, the rate of real GDP growth is: O less than the rate of population growth. O greater than the rate of population growth. less than the rate of inflation. greater than the rate of inflation.

The basic Solow growth model was initially used to help governments of very low income nations measure what source of real GDP growth? O a) Growth due to factor accumulation. b) Growth due to technological progress. Oc) Growth due to efficiency gains. d) All of the above

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 = = 2. Recall that, without population growth, Lt = Lo and assume that Lo Furthermore, recall that, without technology growth, At Ao and assume that A0 = 1. Assume that the savings rate is s = 0.4, the depreciation rate is = 0.15, and that the capital share is a = 0.3. A lower case letter denotes a variable in per capita. For example, kt = K₁/Lt. In the following questions, choose the closest number. What is the value of kss? (a) 40.6 (b) 4.1 c) 2.8 (d) 28

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+ KL₁-a = = Ao and Recall that, without population growth, Lt 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- ciation rate is 8 = 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 What is the value of Yss for the Economy described in Question 7 (a) 36 (b) 3.6 (c) 2.7 (d) 27 Suppose that the economy described in Question 7 economy starts with Ко = 10. Choose the correct one for the change in capital over time. (a) fall (b) grow (c) Once dropped, it grows (d) unchange…

which statement \s are true. use graphs to exlain a. In the Solow growth model, the saving rate is a crucial determinant of the economy's long-run growth rate of output per worker. b. In the endogenous growth model , the representative firm sets the wage so that the demand and supply of efficiency units of labour are equal. c. In the endogenous growth model , there is no steady state of the economy as human capital will always continue to grow forever. d. The assumption of Constant Returns to Scale technology implies that the marginal product of factor imput is always decreasing.

In the steady state in the Solow model, which is NOT one of the uses of new capital?   a. To replace depreciating capital b. To replace capital exported to other countries c. To provide capital for wore out capital and new workers d. To provide capital for new workers