Capital and output
Which of the following is true according to the text?
a) The amount of output being produced determines the amount of capital.
b) The amount of capital being accumulated does not affect the amount of output being produced.
c) The amount of capital determines the amount of output being produced.
d) Saving does not affect capital accumulation.
c) The amount of capital determines the amount of output being produced.
In a closed economy, what is investment equal to?
a) Private saving minus public saving
b) Public saving minus private saving
c) The sum of private saving and public saving
d) Private saving only
c) The sum of private saving and public saving
According to the text, what is the effect of the saving rate on the long-run growth rate of output per worker?
a) It increases the growth rate.
b) It decreases the growth rate.
c) It has no effect on the growth rate.
d) It initially increases and then decreases the growth rate.
c) It has no effect on the growth rate.
According to the text, what matters more to people?
a) How much is saved
b) How much is produced
c) How much they invest
d) How much they consume
d) How much they consume
What is human capital?
a) Machinery
b) Buildings
c) Skills of the workers
d) Financial assets
c) Skills of the workers
Under the assumption of decreasing returns to capital, how does the effect of an increase in capital per worker change as the ratio of capital per worker increases?
a) The effect increases.
b) The effect remains constant.
c) The effect decreases.
d) There is no effect.
c) The effect decreases.
If private saving is proportional to income, what does the parameter 's' represent?
a) Investment rate
b) Public saving rate
c) Saving rate
d) Consumption rate
c) Saving rate
Other things being equal, how do countries with a higher saving rate compare to those with a lower saving rate in the long run?
a) They achieve lower output per worker.
b) They achieve the same output per worker.
c) They achieve higher output per worker.
d) The saving rate has no effect on output per worker.
c) They achieve higher output per worker.
In the long run, what is the impact of a saving rate equal to one?
a) Consumption is maximized
b) Consumption is zero
c) Consumption is equal to saving
d) Consumption is unaffected
b) Consumption is zero
According to the text, what does an increase in the average level of skill lead to?
a) Lower output per worker
b) No change in output per worker
c) Higher output per worker
d) A decrease in capital per worker
c) Higher output per worker
What is the implication of assuming that the population, participation rate, and unemployment rate are all constant?
a) Output per worker, output per person, and output itself all move proportionately.
b) Only output per worker and output per person move proportionately.
c) Only output per person and output itself move proportionately.
d) Output per worker, output per person, and output itself are all constant.
a) Output per worker, output per person, and output itself all move proportionately.
How does the capital stock at the beginning of the next year relate to the capital stock of this year, considering depreciation and investment?
a) Next year's capital stock equals this year's capital stock, plus investment, minus depreciation.
b) Next year's capital stock equals this year's capital stock, minus investment, minus depreciation.
c) Next year's capital stock equals this year's capital stock, plus investment, plus depreciation.
d) Next year's capital stock equals this year's capital stock, minus depreciation.
a) Next year's capital stock equals this year's capital stock, plus investment, minus depreciation.
What is the immediate impact of an increase in the saving rate on consumption?
a) Consumption increases
b) Consumption remains unchanged
c) Consumption decreases
d) Consumption increases in the short run
c) Consumption decreases
What is the golden-rule level of capital?
a) The level of capital that minimizes consumption in the steady state.
b) The level of capital that maximizes saving in the steady state.
c) The level of capital associated with the saving rate that yields the highest level of consumption in steady state.
d) The level of capital where saving equals zero.
c) The level of capital associated with the saving rate that yields the highest level of consumption in steady state.
How is human capital (H) measured in the text?
a) By the number of workers
b) By the value of physical capital
c) Such that workers who are paid twice as much get twice the weight
d) By the average wage of unskilled workers
c) Such that workers who are paid twice as much get twice the weight