1. The Harrod-Domar model from class assumes that a. the savings rate increases

Question

1. The Harrod-Domar model from class assumes that a. the savings rate increases with income. b. the production function has increasing returns to scale c. depreciation is always zero. d. capital grows at the same rate as output. 2. Growth in the Harrod-Domar model depends on a. b. c. d. the growth rate of technology and depreciation. the growth rate of labor and the savings rate. the savings rate, the capital to output ratio, and depreciation. None of the above are completely correct. 3. The Harrod-Domar model is missing which of the following: a. capital. b. technology c. labor d. Both b and c 4. In order to transform the aggregate production function in the Solow model into per effective worker terms, the aggregate production function must have Constant returns to scale. Decreasing returns to scale Increasing returns to scale. Capital as the only factor of production. a. c. d. 5. Steady state in the Solow model implies that a. b. c. d. aggregate output is not growing. capital is not growing. labor is not growing. output per effective worker is not growing.

Explanation / Answer

Ans: 1. (d)

2. (c)

3. (b)

4. (a)

5. (a) it slows down

6. (a)

8. (c)

9. (c)

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