05 Jun Question QUESTION 1 Suppose there are two countries that are identical in every
Question
QUESTION 1
Suppose there are two countries that are identical in every way with the following exception: Country A has a lower depreciation rate than country B. Given this information, we know with certainty that:
the steady state growth rate will be the same in the two countries.
the steady state growth rate will be higher in A than in B.
Capital per worker, K/N, will be higher in B.
Output per worker, Y/N, will be higher in B.
QUESTION 5
An increase in government spending will cause which of the following when a liquidity trap situation exists?
Output will increase.
The interest rate will increase.
Output will decrease.
The interest rate will decrease.
Output will not change.
QUESTION 6
When a liquidity trap situation exists, the most appropriate policy to increase output would be:
a central bank purchase of bonds.
an increase in government spending.
an increase in taxes.
a central bank sale of bonds.
a decrease in government spending.
QUESTION 10
Assume that the production function is characterized by constant returns to scale. Now suppose that both capital and labour increase by 1%, output will:
not change at all.
increase by less than 1%.
increase by 1%.
increase by 2%.
none of the above
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