To address the problems created by the pandemic,suppose the private sector has been permanentlymotivated to develop even more innovations regardingproduction. The Solow growth model then predicts thatin the steady state.O a. output per effective worker and growth rate ofoutput per worker will be lower.O b. output per effective worker will be lower, butgrowth rate of output per worker will be higher.All the other statements are false.O c.O d.both output per effective worker and thegrowth rate of total output will be higher.

The capital per effective worker is the capital that is available for the worker who can use the…

To address the problems created by the pandemic, suppose the private sector has been permanently motivated to develop even more innovations regarding production. The Solow growth model then predicts that in the steady state_____

To address the problems created by the pandemic, suppose the private sector has been permanently motivated to develop even more innovations regarding production. The Solow growth model then predicts that in the steady state_____

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter20: Economic Growth In The Global Economy

Section: Chapter Questions

Problem 5P

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Suppose the government decides to reduce the Department of Science and Technology's budget for research. Assume this cancelled investment in research could have paid off in terms of useful innovations that increase labor efficiency. Which of the following statements is true under the Solow growth model with population growth and technological progress? In the steady state, the growth rate of the country's output per capita is expected to decrease. O b. In the steady state, the growth rate of the country's output per capita is expected to increase. O c. All the other statements are false. d. In the steady state, the growth rate of the country's total output is expected to increase.
Consider the Solow growth model without population growth and technological progress. When investment per worker is greater than the amount of capital per worker that depreciates, then: a. the economy will not be able to reach its steady-state level of capital. O b. the steady-state level of capital per worker is larger than the current level of capital per worker. the steady-state level of capital per worker is smaller than the current level of capital per worker. O d. the steady-state level of capital per worker equals the current level of capital per worker.
In the Solow growth model without population growth and technological progress, how can the steady state of an economy be described? (i) Total capital stock and total output are growing steadily over time. (ii) The change in capital stock per worker is zero. (iii) The level of investment per capita is equal to the depreciation of capital per person. O a. (i), (ii), and (iii) O b. Only (ii) and (iii) O c. Only (i) and (ii) O d. Only (i) and (iii)
3 pts in the Solow model, the economy reaches a steady-state because as capital per worker increases O savings per worker is constant, while the population growth rate is contare and the depreciation rate of capital decen, ing that the economy w gro endogenously while the population growth rate and the depreciation rate of capital are comitant implying that the economy will converge to a sady O marginal savings per worker diminishes, while the population growth rate and the depreciation rate of capital are constant implying that the economy will gro endogenously Osaving perv state. O marginal savings per worker diminishes, while the population growth rate and the depreciation rate of capital are constant, implying that the economy will converge to a steady-state
According to the Solow model, an increase to the savings rate will increase income per worker in the steady-state, but will have no effect on long-run growth rate of income per worker. O increase consumption per worker if and only if the new steady-state capital per worker is greater than the golden rule level of capital per worker. O increase the long-run growth rate of income per worker if and only if the new steady-state capital per worker is greater than the golden rule level of capital per worker. O increase income per worker in the steady-state and long-run growth rate of income per worker.
Suppose that population growth increases. The Solow growth model with population growth and depreciation (but without technological progress) predicts that this will tend to deteriorate people's welfare because of: (i) lower total output (ii) lower output per worker (iii) lower consumption per worker O a. (i), (ii), and (iii) O b. Only (i) and (iii) O c. Only (ii) and (iii) O d. Only (i) and (ii)
Consider the Solow Model with no population or technological growth. Suppose that two countriesare identical except that in Country A the depreciation rate is greater than the depreciation rate inCountry B.a. How do you compare the steady state level of capital per worker in these countries? Illustrategraphically. Explain the economic intuition for the di erences in capital per worker in steadystate.b. Which country a higher output per worker in steady state? What about investment per workerin steady state? Explain carefully.
Suppose Country A currently has more output and capital than Country B. However, Country A has no technological growth while Country B has persistent technological growth. Assume that the two countries are similar in all other variables. According to the Solow growth model with technological progress, we can expect that: O a. At some future point, Country B will have a higher income per capita. O b. In the steady state, Country B will reach the same income per capita as Country A. All the other statements are false. c. O d. Since they have different steady states, the growth of output per effective worker in both countries will have different rates.
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In the Solow growth model, which of the following is/are the effect/s of an increase in the rate of technological progress? (i) higher capital-output ratio (ii) faster growth in output per worker (iii) faster growth in output O a. (i), (ii), and (iii) O b. Only (i) and (ii) O c. Only (1) and (iii) O d. Only (ii) and (iii)
Suppose Country A has twice the population growth but half the technological growth of Country B. County B's population growth is equal to its technological growth. Assuming that the two countries are similar in all other variables, then according to the Solow growth model: O a. The growth rate of total output is the same for Country A and Country B. b. The growth rate of total output for Country A is lower than Country B. Cannot tell. Need more information. O c. O d. The growth rate of total output for Country A is higher than Country B.