For an economy in which there is no technological progress, explain what must occur for the steady state to occur. Also explain what this implies about the rate of growth of output, output per worker, and the capital stock
What will be an ideal response?
The steady occurs when the economy is in equilibrium. Specifically, the steady state refers to the situation where K/N and Y/N are constant. K/N will not change when investment per worker equals depreciation per worker. During the adjustment process, the growth rates of Y, Y/N, and K/N will all be negative. Once the steady state is reached, these variables are constant and the growth rates will be zero.
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A network externality refers to a situation where:
A) the value of a product increases as more consumers start to use it. B) firms collude to sell products at a price higher than the equilibrium market price. C) a firm that has control over key resources auctions the resources off to other firms. D) the government interferes to prevent the concentration of market power in the hands of a few firms.
The theory of optimum currency areas predicts that
A) floating exchange rates are most appropriate for areas closely integrated through international trade and factor movements. B) fixed exchange rates are most appropriate for areas that are loosely integrated through international trade and factor movements. C) fixed exchange rates are most appropriate for areas closely integrated through international trade and factor movements. D) floating exchange rates are most appropriate for all countries in Europe. E) fixed exchange rates are most appropriate for all countries in Europe.
The fact that 80% of the assets accumulated during a lifetime are bequeathed to heirs in the United States suggests that
A) the appropriate time horizon for consumption theory is the lifetime of the earner. B) the appropriate time horizon for consumption theory is intergenerational. C) the Barro-Ricardo equivalence theorem is correct. D) it is true that higher taxes increase savings.
Most economists agree that the immediate cause of the large majority of cyclical changes in the levels of real output and employment is unexpected changes in:
What will be an ideal response?