Question

1. An economy has the production function y = 20k1/2. The current capital stock is 256 and the depreciation rate is 8 percent, and the population growth rate is 2 percent. For income per person to grow, the saving rate must exceed

Question 1 options:

	6 percent
	8 percent
	10 percent
	12 percent

Question 2 (1 point)

2. According to the Solow model, if an economy decreases its saving rate, then in the new steady state, compared to the old one, the marginal product of capital is ______ and the growth rate is ______.

Question 2 options:

	the same, lower
	the same, higher
	lower, the same
	higher, the same

Question 3 (1 point)

3. In the steady state of the Solow model, low population growth leads to a _____ level of income per worker and _____ growth in total income.

Question 3 options:

	higher, higher
	higher, lower
	lower, higher
	lower, lower

Question 4 (1 point)

4. If the economy has more capital than in the Golden Rule steady state, increasing saving rate will

Question 4 options:

	increase both steady-state income and steady-state consumption
	decrease both steady-state income and steady-state consumption
	increase steady-state income but decrease steady-state consumption
	decrease steady-state income but increase steady-state consumption

Question 5 (1 point)

5. In the Solow model, a decrease in which of the following reduces steady-state growth in income per person?

Question 5 options:

	the saving rate
	the population growth rate
	the depreciation rate
	none of the above

Answer 1

2):-c is right option

According to the Solow model, if an economy increases its saving rate, then in the new steady state, compared with the old one, the marginal product of capital is lower and the growth rate is the same

Lower, the same

The Solow Growth Model is defined as that it explains how saving rates and population growth in economy determine capital accumulation, which in turn help in determining economics

4) :- B is right option

Higher, lower

In the steady state of the Solow model, low population growth leads to a higher level of income per worker and lower growth in total income

The Solow Growth Model state how saving rates and population growth in economy determine capital accumulation, which in turn helpful in determining economics

4) :-D is right option

If the economy has more capital than the Golden Rule steady state, reducing the saving rate will decrease steady-state income but increase steady-state consumption

Steady-state which is denoted by variable*, point at which investment equals the amount of depreciation

5):-D is right option

In the Solow model, an increase in which of the following raise steady-state growth in income per person

None of the above