Solow Model Quiz

Solow Model Quiz

1. Consider a country that is in the steady state. All else the same, a permanent increase in the rate of population growth can be expected to _____ the level of output per capita and ____ the level of consumption per capita.

A. increase; increase

B. decrease; decrease

C. increase; decrease

D. decrease; increase

2. Consider a country that is in the steady state. All else the same, a permanent increase in the rate of saving can be expected to _____ the level of output per capita and ____ the level of consumption per capita.

A. increase; increase

B. decrease; decrease

C. increase; decrease

D. decrease; increase

3. Consider a country that is in the steady state. All else the same, a permanent increase in the rate of saving can be expected to _____ the growth rate of output per capita and ____ the level of output per capita in the new steady state.

A. increase; increase

B. increase; have no effect on

C. have no effect on; increase

D. decrease; increase

4. All else the same, an increase in the level of the capital stock will ____ the level of depreciation and ____ the marginal product of capital.

A. increase; increase

B. decrease; decrease

C. increase; decrease

D. decrease; increase

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