From an initial steady state, suppose a government policy increases the national saving rate, causing the capital stock to start growing faster than the population. With (K/N) now rising, the Solow growth model goes on to say that (Y/N)
A) will rise only so far, to where the increased requirement for new capital matches the increased saving.
B) will rise only temporarily, so long as the population growth rate remains constant.
C) will rise and keep on rising, so long as the national saving rate exceeds the population growth rate.
D) never does rise, since the government's policy does not affect either the population growth rate or the depreciation rate.
A
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A variable factor of production:
A. is fixed in the long run but variable in the short run. B. is variable in both the short run and the long run. C. plays no role in the law of diminishing marginal returns. D. is variable only in the short run.
In the circular flow, ________ provide the factor services
A) businesses and households B) producers C) households D) businesses
The public debt is the sum of all previous:
A. budget deficits of the federal government. B. expenditures of the federal government. C. budget deficits minus any budget surpluses of the federal government. D. budget surpluses minus the current budget deficit of the federal government.
The Dominican Republic has a comparative advantage in the production of tobacco, and Panama has a comparative advantage in the production of oranges. If both countries specialize based on the theory of comparative advantage
A. only the production of both goods will increase. B. only the consumption of both goods will increase. C. only the production of tobacco will increase. D. the production and consumption of both goods will increase.