8. Suppose y = k<sup>1/2</sup>, total factor productivity is constant and equal to 1, s = 0.40, and d = 0.10. When the economy reaches the steady state, consumption per worker is ____
A) $1.20
B) $2.40
C) $4.80
D) $13.60
9. The level of investment necessary to keep the capital-labor ratio constant is called
A) capital investment.
B) break-even investment.
C) depreciated investment.
D) diluted investment.
10. If d = the depreciation rate, n = the growth rate of the labor force, and k = the capital-labor ratio, which of the following expressions best describes break-even investment?
A) dn k
B) (d - n) / k
C) dk - nk
D) (d + n)k
11. The Solow growth model predicts that a lower labor force growth rate will lead to
A) a decreased steady state and higher break-even investment.
B) higher productivity and a higher standard of living.
C) a lower saving rate and decreased investment.
D) a higher rate of dilution and lower break-even investment
12. Labor-augmenting technological change refers to improvements in efficiency that
A) occur without increasing the productivity of labor or the efficiency of capital goods.
B) increase the productivity of labor and the efficiency of capital goods.
C) increase the efficiency of capital goods without having to increase the productivity of labor.
D) increase the productivity of labor but that do not directly make capital goods more efficient.
13. Which expression best represents the break-even level of investment when incorporating labor-augmenting technological change into the Solow growth model?
A) (d + n + g)k
B) (d + n)k
C) (d + n) / (k + g)
D) (d + n + k) / (gk)
14. When incorporating labor-augmenting technological change into the Solow growth model, the focus is on
A) capital per worker and output per worker.
B) capital per effective worker and output per worker.
C) capital per worker and output per effective worker.
D) capital per effective worker and output per effective worker.
