The Solow growth model describes:
how saving, population growth, and technological change affect output over time.
When f(k) is drawn on a graph with increases in k noted along the horizontal axis, the slope of the line denotes:
the marginal product of capital.
In the Solow growth model the saving rate determines the allocation of output between:
investment and consumption.
In the steady state with no population growth or technological change, the capital stock does not change because investment equals:
depreciation.
If the national saving rate increases, the:
economy will grow at a faster rate until a new, higher, steady-state capital-labor ratio is reached.
The Golden Rule level of capital accumulation is the steady state with the highest level of:
consumption per worker.
The Golden Rule level of steady-state investment per worker is:
BC on graph.
If an economy with no population growth or technological change has a steady-state MPK of 0.125, a depreciation rate of 0.1, and a saving rate of 0.225, then the steady-state capital stock:
Is less than the Golden Rule level.
If an economy is in a steady state with no population growth or technological change and the capital stock is above the Golden Rule level and the saving rate falls:
output, investment, and depreciation will decrease, and consumption will increase and then decrease but finally approach a level above its initial state.
A reduction in the saving rate starting from a steady state with more capital than the Golden Rule causes investment to ______ in the transition to the new steady state.
decrease.
Suppose an economy is initially in a steady state with capital per worker below the Golden Rule level. If the saving rate increases to a rate consistent with the Golden Rule, then in the transition to the new steady state consumption per worker will:
first fall below then rise above the initial level.
In the Solow growth model of an economy with population growth but no technological change, the break-even level of investment must do all of the following except:
equal the marginal productivity of capital (MPK)
Assume two economies are identical in every way except that one has a higher population growth rate. According to the Solow growth model, in the steady state the country with the higher population growth rate will have a ______ level of output per person
lower; the same.
In the Solow growth model with population growth, but no technological change, which of the following will generate a higher steady-state growth rate of total output?
a higher population growth rate.
The Solow model with population growth but no technological change cannot explain persistent growth in standards of living because:
output, capital, and population all grow at the same rate in the steady state.
In the Solow growth model with population growth, but no technological progress, if in the steady state the marginal product of capital equals 0.10, the depreciation rate equals 0.05, and the rate of population growth equals 0.03, then the capital per wor
is below.
Analysis of population growth around the world concludes that countries with high population growth tend to:
have a lower level of income per worker than other parts of the world.
According to Kremer, large populations:
are a prerequisite for technological advances and higher living standards.
According to Malthus, large populations:
place great strains on an economy's productive resources, resulting in perpetual poverty.