Part B: True, False, Uncertain, and Explain. Answer 2 of the following 3 questions. (8 points each, 16
points total; all credit for the explanation)
4. International evidence confirms convergence, showing that countries with low per capita incomes in
1960 grew faster than economies with high per capita incomes.
5. Over the last several years, China has experienced a capital outflow, and the Neo-Classical Model of
Income Distribution would imply that the real wage and the real rental price paid to capital will fall
and total real GDP will fall in China in the long run, other things equal.
6. If the saving rate increases, then in the Solow model with labor augmenting technological change, the
growth rate of output per worker is unchanged in the steady state, but in Romer’s learning-by-doing
model, the growth rate of output per worker increases in the steady state or balanced growth part