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Testcp 11
Testcp 11
Name___________________________________
MULTIPLE CHOICE. Choose the one alternative that best completes the statement or answers the question.
1)
At the current steady state capital-labor ratio, assume that the steady state level of per capita consumption, (C/N)*, is less
than the golden rule level of steady state per capita consumption. Given this information, we can be certain that
1)
_______
A)
an increase in the saving rate will cause an increase in the steady state level of per capita consumption ((C/N)*).
2)
2)
_______
A)
the level of capital that maximizes consumption per worker in the steady state.
C)
An increase in the saving rate will not affect which of the following variables in the long run?
3)
_______
A)
4)
Suppose there are two countries that are identical in every way with the following exception Country A has a higher
saving rate than country B. Given this information, we know with certainty that
4)
_______
A)
Suppose two countries are identical in every way with the following exception. Economy A has a higher rate of
depreciation (δ) than economy B. Given this information, we know with certainty that
5)
_______
A)
6)
6)
_______
A)
Suppose the following situation exists for an economy Kt+1/N > Kt/N. Given this information, we know that
7)
_______
A)
8)
For this question assume that technological progress does not occur. Which of the following variables will not change
when the economy reaches steady state equilibrium?
8)
_______
A)
only A and B
9)
When steady state capital per worker is below the golden-rule level, we know with certainty that an increase in the saving
rate will
9)
_______
A)
increase consumption in the short run, and decrease it in the long run.
B)
increase consumption in both the short run and the long run.
C)
decrease consumption in both the short run and the long run.
D)
decrease consumption in the short run, and increase it in the long run.
E)
10)
Suppose an economy experiences a 5% increase in human capital. We know that this will cause
10)
______
A)
no change in Y/N.
C)
The Social Security system in the United States was introduced in which year?
11)
______
A)
1915
B)
1935
C)
1945
D)
1955
E)
12)
Based on our understanding of the model presented in Chapter 11, which of the following will cause a permanent
increase in growth?
12)
______
A)
When the economy is in the steady state, we know with certainty that
13)
______
A)
14)
Which of the following will likely cause an increase in output per worker?
14)
______
A)
B)
D)
15)
Which of the following represents the change in the capital stock?
15)
______
A)
B)
D)
16)
Suppose there are two countries that are identical in every way with the following exception Country A has a higher stock
of human capital than country B. Given this information, we know with certainty that
16)
______
A)
17)
If endogenous growth models are correct, a lower rate of growth in the long run could occur as a result of which of the
following?
17)
______
A)
a redefinition of depreciation
D)
18)
Suppose an economy experiences a reduction in the saving rate. We know with certainty that this increase in the saving
rate will
18)
______
A)
19)
Suppose two countries are identical in every way with the following exception. Economy A has a higher saving rate than
economy B. Given this information, we know with certainty that
19)
______
A)
20)
For this question, assume that technological progress does occur. For such an economy, we know that the level of output
per worker will
20)
______
A)
remain constant.
C)
21)
Suppose an economy experiences a reduction in the saving rate. As the economy adjusts to this, we would expect output
per worker
21)
______
A)
to decrease slower at the beginning, then faster, and then at a constant rate in the steady state.
C)
to first increase, then decrease at an increasing rate, then increase at a constant rate in the steady state.
D)
to decrease at a constant rate and continue increasing at that rate in the steady state.
E)
22)
Suppose an economy experiences a reduction in the saving rate. We know with certainty that this reduction in the saving
rate will
22)
______
A)
increase steady state consumption only if the decrease in saving exceeds the decrease in depreciation.
C)
23)
Suppose there are two countries that are identical in every way with the following exception Country A has a lower
depreciation rate (δ) than country B. Given this information, we know with certainty that
23)
______
A)
the growth rate will be the same in the two countries.
B)
24)
For this question assume that technological progress does not occur. In Japan, the rate of saving has generally been
greater than in the U.S. Given this information, we know that in the long run
24)
______
A)
Output per worker in Japan will be greater than U.S. output per worker.
B)
Japan's growth rate will be greater than the U.S. growth rate.
C)
Capital per worker in Japan will be no different than U.S. capital per worker.
D)
25)
Suppose the saving rate is initially greater than the golden rule saving rate. We know with certainty that a reduction in
the saving rate will cause
25)
______
A)
26)
Which of the following represents the effects in period t of an increase in the saving rate in period t?
26)
______
A)
no change in K/N
B)
a reduction in C/N
C)
no change in Y/N
D)
27)
Suppose a recent budgetary policy results in a reduction in the national saving rate. Such a change in the saving rate will
NOT affect which of the following variables in the long run?
27)
______
A)
B)
D)
28)
28)
______
A)
B)
C/N = 0.
D)
29)
Suppose, due to the effects of a military conflict that has ended, that a country experiences a large reduction in its capital
stock. Assume no other effects of this event on the economy. Which of the following will tend to occur as the economy
adjusts to this situation?
29)
______
A)
zero growth for some time, followed by a gradually increasing growth rate
D)
30)
Suppose the economy is initially in the steady state. An increase in the depreciation rate (δ) will cause
30)
______
A)
a reduction in C/N.
B)
a reduction in Y/N.
C)
a reduction in K/N.
D)
1)
2)
3)
4)
C
5)
6)
7)
8)
9)
10)
11)
12)
13)
14)
D
15)
16)
17)
18)
19)
20)
21)
22)
23)
24)
A
25)
26)
27)
28)
29)
30)