Question

4. Which of the following will cause an increase in output per worker in the long run? A. an increase in the saving rate ( B. a reduction in the depreciation rate C. an increase in the stock of human capital D. an improvement of technology 5. Suppose, due to a military conflict, 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? A. a relatively low growth rate for some time ( B. a relative high growth rate for some time ( C. zero growth for some time, followed by a gradually increasing growth rate D. positive growth, followed by negative growth, and then zero growth 6. When steady state capital per worker is above the golden-rule level, we know with certainty that an increase in the saving rate will A. increase consumption in both the short run and the long run. ( B. decrease consumption in both the short run and the long run. ( C. decrease consumption in the short run, and increase it in the long run. ( D. increase consumption in the short run, and decrease it in the long run. 7. Suppose the following situation exists for an economy: Kt+1/N > Kt/N. Given this information, we know that A. saving per worker equals depreciation per worker in period t. B. saving per worker is less than depreciation per worker in period t. ( C. saving per worker is greater than depreciation per worker in period t. D. investment per worker is greater than depreciation per worker in period t. 8. Which of the following will cause an increase in output per effective worker? A. an increase in population growth B. a decrease in the rate of depreciation C. a reduction in the saving rate D. an increase in the rate of technological progress E. an increase in the saving rate 9. An increase in productivity will likely cause A. the AS curve to shift upward, but has no effect on the AD curve. B. the AS curve to shift downward, and the AD curve to shift leftward. C. the AS curve to shift upward and the AD curve to shift rightward. ( D. the AS curve to shift downward and the AD curve to shift rightward. ( E. the AS curve to shift downward, and have an ambiguous effect on the AD curve.

Answer 1

4. The correct answer is 'Option D'.

An improvement in technology will reduce the cost of production as a result of which profits will increase. The firms would be encouraged to produce more units of output to maximize the profits. This will increase the output produced per worker because more units can be produced due to an improvement of technology.