Question 1

The Solow model assumes the saving rate is:

Accepted Answer

A)  zero.
B)  constant.
C)  decreasing as income increases.
D)  increasing as income increases.
E)  larger as the interest rate rises.F) B) and D)
G) A) and B)

Question 2

According to the Solow model,in the steady state,countries with high savings rates should have a:

Accepted Answer

A)  low labor-output ratio.
B)  low capital-output ratio.
C)  high capital-output ratio.
D)  high depreciation rate.
E)  none of the aboveF) A) and B)
G) B) and E)

Question 3

In the steady state,gross investment is less than capital depreciation.

Accepted Answer

A) True 
 B)False

Question 4

In the Solow model,we generally assume that the capital depreciation rate is the same across all countries.

Accepted Answer

A) True 
 B)False

Question 5

Given a production function  
,if  
,  
,  
,and  
,
(a)calculate the steady-state level of capital.
(b)does the above production function exhibit constant returns to scale? Or does it exhibit diminishing marginal returns? Explain,including defining the difference between these two concepts.

Accepted Answer

(a)The steady-state level of capital is ...

Question 6

On average,if both rich and poor countries grow at the same rate,this suggests that:

Accepted Answer

A)  most countries are contracting.
B)  most countries still are growing.
C)  no countries have reached their steady state.
D)  most countries have reached their steady state.
E)  most countries are unproductive.F) All of the above
G) B) and D) D

Question 7

In the Solow model,the steady-state capital stock is a function of:

Accepted Answer

A)  productivity.
B)  the initial capital stock,productivity,and the saving rate.
C)  the initial capital stock,productivity,and the depreciation rate.
D)  the labor stock and the steady-state level of capital stock.
E)  productivity,the depreciation rate,the labor stock,and the savings rate.F) A) and C)
G) A) and B)

Question 8

For which of the following does the Solow model not provide adequate explanations?

Accepted Answer

A)  why saving rates differ across countries
B)  the cause of productivity differences across countries
C)  why population growth rates differ across countries
D)  what causes long-term economic growth
E)  all of the aboveF) A) and B)
G) A) and E)

Question 9

The key insight in the Solow model is that:

Accepted Answer

A)  saving rates are determined in a particular manner.
B)  savings have no impact on economic growth.
C)  capital depreciation enhances economic growth.
D)  the relationship between capital and output is static.
E)  capital accumulation contributes to economic growth.F) C) and D)
G) B) and D)

Question 10

What are the key assumptions of the Solow growth model?

Accepted Answer

The key assumptions are:
• constant returns to scale production function;
• the savings and depreciation rates are exogenous;
• a closed economy;
• output is divided between consumption and investment goods;
• total factor productivity is exogenous.

Question 11

In the Solow model,the equation of capital accumulation is  
.

Accepted Answer

A) True 
 B)False

Question 12

Assume two economies are identical in every way except that one has a higher saving rate.According to the Solow growth model,in the steady state,the country with the higher saving rate will have __________ level of total output and __________ rate of growth of output as (than) the country with the lower saving rate.

Accepted Answer

A)  a higher;a higher
B)  a higher;the same
C)  a lower;a higher
D)  a higher;a lower
E)  the same;the sameF) A) and E)
G) B) and C)

Question 13

Using the Solow model,if,in time t = 0,the initial capital stock is 
,investment is 
,and 
Is the depreciation rate,capital accumulation is:

Accepted Answer

A)    .
B)    .
C)    .
D)    .
E)    .F) A) and C)
G) B) and C)

Question 14

Using the Solow model,if,in time t = 50,the capital stock is 
,investment is 
,and 
Is the depreciation rate,capital accumulation is

Accepted Answer

A)    .
B)    .
C)    .
D)    .
E)    .F) C) and D)
G) B) and D)

Question 15

The production function used in the Solow model is:

Accepted Answer

A)    .
B)    .
C)    .
D)    .
E)    .F) B) and D)
G) B) and C) C

Question 16

In the Solow model,the steady-state level of output per worker is a function of:

Accepted Answer

A)  productivity.
B)  the initial capital stock,productivity,and the saving rate.
C)  the initial capital stock,productivity,and the depreciation rate.
D)  the initial capital stock and the steady-state level of capital stock.
E)  productivity,the depreciation rate,and the saving rate.F) B) and D)
G) A) and B)

Question 17

In the steady state,capital accumulation is zero.

Accepted Answer

A) True 
 B)False

Question 18

The amount of capital in an economy is a (an) __________,while the amount of investment is a (an) __________.

Accepted Answer

A)  flow;stock
B)  stock;flow
C)  final good;intermediate good
D)  intermediate good;final good
E)  none of the aboveF) B) and C)
G) All of the above

Question 19

In the Solow model,the __________ plays a __________ role than it does in the standard production function model.

Accepted Answer

A)  labor supply;larger
B)  productivity parameter;larger
C)  capital stock;larger
D)  capital stock;smaller
E)  productivity parameter;smallerF) A) and D)
G) A) and C)

Question 20

-Consider the Solow model exhibited in Figure 5.3.
Which of the following is (are) true?
i.For any single country,the movement from point a to b is due to an increase in the saving rate, 
) 
ii.For any single country,the movement from point c to b is due to an increase in capital stock for the saving rate 
) 
iii.If 
Stands for the saving rates in Countries 1 and 2,respectively,Country 2 has a lower saving rate.

Accepted Answer

A)  i
B)  ii
C)  iii
D)  i and ii
E)  i,ii,and iiiF) B) and C)
G) B) and D)

Exam 5: The Solow Growth Model

The Solow model assumes the saving rate is:

Correct Answer
verified

According to the Solow model,in the steady state,countries with high savings rates should have a:

Correct Answer
verified

In the steady state,gross investment is less than capital depreciation.

Correct Answer
verified

In the Solow model,we generally assume that the capital depreciation rate is the same across all countries.

Correct Answer
verified

Given a production function ,if , , ,and , (a)calculate the steady-state level of capital. (b)does the above production function exhibit constant returns to scale? Or does it exhibit diminishing marginal returns? Explain,including defining the difference between these two concepts.

Correct Answer
verified
(a)The steady-state level of capital is ...
View Answer

On average,if both rich and poor countries grow at the same rate,this suggests that:

Correct Answer
verified
D

In the Solow model,the steady-state capital stock is a function of:

Correct Answer
verified

For which of the following does the Solow model not provide adequate explanations?

Correct Answer
verified

The key insight in the Solow model is that:

Correct Answer
verified

What are the key assumptions of the Solow growth model?

Correct Answer
verified
The key assumptions are: • constant returns to scale production function; • the savings and depreciation rates are exogenous; • a closed economy; • output is divided between consumption and investment goods; • total factor productivity is exogenous.

In the Solow model,the equation of capital accumulation is .

Correct Answer
verified

Assume two economies are identical in every way except that one has a higher saving rate.According to the Solow growth model,in the steady state,the country with the higher saving rate will have level of total output and rate of growth of output as (than) the country with the lower saving rate.

Correct Answer
verified

Using the Solow model,if,in time t = 0,the initial capital stock is ,investment is ,and Is the depreciation rate,capital accumulation is:

Correct Answer
verified

Using the Solow model,if,in time t = 50,the capital stock is ,investment is ,and Is the depreciation rate,capital accumulation is

Correct Answer
verified

The production function used in the Solow model is:

Correct Answer
verified
C

In the Solow model,the steady-state level of output per worker is a function of:

Correct Answer
verified

In the steady state,capital accumulation is zero.

Correct Answer
verified

The amount of capital in an economy is a (an) ,while the amount of investment is a (an) .

Correct Answer
verified

In the Solow model,the plays a role than it does in the standard production function model.

Correct Answer
verified

Correct Answer
verified

Exam 5: The Solow Growth Model

The Solow model assumes the saving rate is:

Correct AnswerverifiedShow Answer

According to the Solow model,in the steady state,countries with high savings rates should have a:

Correct AnswerverifiedShow Answer

In the steady state,gross investment is less than capital depreciation.

Correct AnswerverifiedShow Answer

In the Solow model,we generally assume that the capital depreciation rate is the same across all countries.

Correct AnswerverifiedShow Answer

Given a production function ,if , , ,and , (a)calculate the steady-state level of capital. (b)does the above production function exhibit constant returns to scale? Or does it exhibit diminishing marginal returns? Explain,including defining the difference between these two concepts.

Correct Answerverified(a)The steady-state level of capital is ...View AnswerShow Answer

On average,if both rich and poor countries grow at the same rate,this suggests that:

Correct AnswerverifiedD

In the Solow model,the steady-state capital stock is a function of:

Correct AnswerverifiedShow Answer

For which of the following does the Solow model not provide adequate explanations?

Correct AnswerverifiedShow Answer

The key insight in the Solow model is that:

Correct AnswerverifiedShow Answer

What are the key assumptions of the Solow growth model?

Correct AnswerverifiedThe key assumptions are: • constant returns to scale production function; • the savings and depreciation rates are exogenous; • a closed economy; • output is divided between consumption and investment goods; • total factor productivity is exogenous.

In the Solow model,the equation of capital accumulation is .

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Using the Solow model,if,in time t = 0,the initial capital stock is ,investment is ,and Is the depreciation rate,capital accumulation is:

Correct AnswerverifiedShow Answer

Using the Solow model,if,in time t = 50,the capital stock is ,investment is ,and Is the depreciation rate,capital accumulation is

Correct AnswerverifiedShow Answer

The production function used in the Solow model is:

Correct AnswerverifiedC

In the Solow model,the steady-state level of output per worker is a function of:

Correct AnswerverifiedShow Answer

In the steady state,capital accumulation is zero.

Correct AnswerverifiedShow Answer

The amount of capital in an economy is a (an) __________,while the amount of investment is a (an) __________.

Correct AnswerverifiedShow Answer

In the Solow model,the __________ plays a __________ role than it does in the standard production function model.

Correct AnswerverifiedShow Answer

Correct AnswerverifiedShow Answer

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
(a)The steady-state level of capital is ...
View Answer

Correct Answer
verified
D

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
The key assumptions are: • constant returns to scale production function; • the savings and depreciation rates are exogenous; • a closed economy; • output is divided between consumption and investment goods; • total factor productivity is exogenous.

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified

Correct Answer
verified
C

Correct Answer
verified

Correct Answer
verified

The amount of capital in an economy is a (an) ,while the amount of investment is a (an) .

Correct Answer
verified

In the Solow model,the plays a role than it does in the standard production function model.

Correct Answer
verified

Correct Answer
verified