1. Which of the following will cause a reduction in output per worker in the lon

Question

1. Which of the following will cause a reduction in output per worker in the long run? capital accumulation or technological progress O capital accumulation an increase in the number of workers expansionary monetary policy none of the above C 2. For this question, assume that a country experiences a permanent increase in its saving rate. Which of the following will occur as a result of this increase in the saving rate? a permanently faster growth rate of output a permanently higher level of output per capita C C a permanently higher level of capital per worker all of the abovie both B and C. 3. Which of the following must occur to sustain economic growth in the long run? technological progress capital accumulation O a higher saving rate C all of the above 4. Suppose there are two countries that are identical with the following exception. The saving rate in country A is greater than the saving rate in country B. Given this information, we know that in the long run the growth rate of output per capita will be greater in B than in A. C the growth rate of output per capita will be greater in A than in B O the capital-labor ratios (KN) will be the same in both countries. the growth rate of output per capita will be the same in both countries

Explanation / Answer

The correct option is (c). Other factors will increase the output per worker. If saving rate increases the production function and the investment function both moves up and the capital per worker in the new steady state will be higher, output will be higher and the growth rate of output since it depends on the growth rate of labour only. Thus the correct option is (e), both B and C. The correct option is (d), all these lead to increase in economic growth in steady state/long run. The correct option is (d). The growth rate of output per worker and capital per worker is same and equal to zero in both the countries

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