If the savings rate of Country A increases from 10% to 20% and technology growth is zero, then the neoclassical model predicts that in the steady state
a. the capital-to-labor ratio will not grow in the long-run but higher than it is now.
b. the capital-to-labor ratio will grow 10% faster.
c. the growth rate of output will be permanently higher.
d. the level of output will be permanently higher.
e. a and d.
E
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Refer to Table 13-3. What are the profit-maximizing/loss-minimizing output level and price?
A) Q = 0 (firm should not produce) B) Q = 3; P = $18 C) Q = 4; P = $17 D) Q = 5; P = $16
In the case of a domestic monetary shock, floating exchange rates
A) make the home economy less vulnerable. B) make the home economy more vulnerable. C) make the foreign economy more vulnerable. D) would not affect the foreign economy. E) would not affect the home economy.
The situation in which expansionary fiscal policy does not lead to a rise in aggregate output is referred to as
A) fiscal neutrality. B) a recession. C) complete crowding out. D) inflation.
Which of the following actions best illustrates adverse selection?
a. A person adds risky stock to his portfolio. b. A person who has narrowly avoided many accidents applies for automobile insurance. c. A person is unwilling to buy a stock when she believes its price has an equal chance of rising or falling $10. d. A person purchases homeowners insurance and then checks his smoke detector batteries less frequently.