Question

13. Consider the Solow model without a Cobb-Douglas production function, but with the following per worker production function: $y_t = \frac{2k_t}{k_t + 3}$ All of the other parts of the Solow model are the same as in Chapter 5 and in lecture. Assume that the savings rate is 50 percent ($s = 0.50$) and the depreciation rate is 20 percent ($d = 0.20$). Based on this information, the steady-state level of capital per worker is: A. equal to the Golden Rule level of capital per worker. B. below the Golden Rule level of capital per worker. C. above the Golden Rule level of capital per worker. D. may be above or below the Golden Rule level of capital per worker, depending on capital's share of income. 14. There is evidence that when the money growth rate is extremely high, the A. inflation rate decreases. B. growth rate of velocity increases. C. inflation rate is faster than the money growth rate. D. Both A and B E. Both B and C 15. In economics, a rival good is one that A. cannot be consumed by more than two persons at the same time. B. can be consumed by more than one person at a time. C. can be consumed by more than one person at a time but is congested. D. cannot be consumed by more than one person at a time. E. None of the above. 16. Using the quantity theory of money, if real GDP growth is 2 percent per year, the money growth rate is 5 percent per year, and velocity is constant, then the inflation rate is: A. 2 percent. B. -2 percent. C. 8 percent. D. -8 percent. E. 3 percent. 17. The natural rate of unemployment consists of: A. structural and frictional unemployment. B. cyclical and frictional unemployment. C. structural and seasonal unemployment. D. seasonal and frictional unemployment. E. frictional, structural, and cyclical unemployment. 4

          13.
Consider the Solow model without a Cobb-Douglas production function, but with the
following per worker production function:
$y_t = \frac{2k_t}{k_t + 3}$
All of the other parts of the Solow model are the same as in Chapter 5 and in lecture.
Assume that the savings rate is 50 percent ($s = 0.50$) and the depreciation rate is 20
percent ($d = 0.20$). Based on this information, the steady-state level of capital per
worker is:
A.
equal to the Golden Rule level of capital per worker.
B.
below the Golden Rule level of capital per worker.
C.
above the Golden Rule level of capital per worker.
D.
may be above or below the Golden Rule level of capital per worker, depending on
capital's share of income.
14.
There is evidence that when the money growth rate is extremely high, the
A.
inflation rate decreases.
B.
growth rate of velocity increases.
C.
inflation rate is faster than the money growth rate.
D.
Both A and B
E.
Both B and C
15.
In economics, a rival good is one that
A.
cannot be consumed by more than two persons at the same time.
B.
can be consumed by more than one person at a time.
C.
can be consumed by more than one person at a time but is congested.
D.
cannot be consumed by more than one person at a time.
E.
None of the above.
16.
Using the quantity theory of money, if real GDP growth is 2 percent per year, the money
growth rate is 5 percent per year, and velocity is constant, then the inflation rate is:
A.
2 percent.
B.
-2 percent.
C.
8 percent.
D.
-8 percent.
E.
3 percent.
17.
The natural rate of unemployment consists of:
A.
structural and frictional unemployment.
B.
cyclical and frictional unemployment.
C.
structural and seasonal unemployment.
D.
seasonal and frictional unemployment.
E.
frictional, structural, and cyclical unemployment.
4

13.
Consider the Solow model without a Cobb-Douglas production function, but with the
following per worker production function:
yt = (2kt)/(kt + 3)
All of the other parts of the Solow model are the same as in Chapter 5 and in lecture.
Assume that the savings rate is 50 percent (s = 0.50) and the depreciation rate is 20
percent (d = 0.20). Based on this information, the steady-state level of capital per
worker is:
A.
equal to the Golden Rule level of capital per worker.
B.
below the Golden Rule level of capital per worker.
C.
above the Golden Rule level of capital per worker.
D.
may be above or below the Golden Rule level of capital per worker, depending on
capital's share of income.
14.
There is evidence that when the money growth rate is extremely high, the
A.
inflation rate decreases.
B.
growth rate of velocity increases.
C.
inflation rate is faster than the money growth rate.
D.
Both A and B
E.
Both B and C
15.
In economics, a rival good is one that
A.
cannot be consumed by more than two persons at the same time.
B.
can be consumed by more than one person at a time.
C.
can be consumed by more than one person at a time but is congested.
D.
cannot be consumed by more than one person at a time.
E.
None of the above.
16.
Using the quantity theory of money, if real GDP growth is 2 percent per year, the money
growth rate is 5 percent per year, and velocity is constant, then the inflation rate is:
A.
2 percent.
B.
-2 percent.
C.
8 percent.
D.
-8 percent.
E.
3 percent.
17.
The natural rate of unemployment consists of:
A.
structural and frictional unemployment.
B.
cyclical and frictional unemployment.
C.
structural and seasonal unemployment.
D.
seasonal and frictional unemployment.
E.
frictional, structural, and cyclical unemployment.
4

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