If the share of GDP used for capital goods is 0.11, the growth rate of productivity is 0, the growth rate of population is 0.04, the depreciation rate is 0.01, the initial capital/output ratio is 2.28, and the elasticity of GDP

Question 1

If the share of GDP used for capital goods is 0.11, the growth rate of productivity is 0, the growth rate of population is 0.04, the depreciation rate is 0.01, the initial capital/output ratio is 2.28, and the elasticity of GDP with respect to capital is 0.4, then what is the steady state value of the capital/output ratio? Use 2 decimal places.

Question 2

Imagine that you have an economy that is on a balanced growth path. Then, the share of GDP devoted to new capital, s subscript I

, shifts up permanently. What happens *immediately* to the growth rate of GDP per capita?

		It becomes lower than productivity growth,
		It becomes higher than productivity growth,
		It remains the same as productivity growth,
		It becomes zero

Question 3

Imagine that you have an economy that is on a balanced growth path. Then, the population growth rate, g subscript L

, shifts up permanently. What happens *immediately* to the level of GDP per capita?

		It falls
		It rises
		Nothing
		It becomes zero

Question 4

Imagine that you have an economy that is on a balanced growth path. Then, the population growth rate, g subscript L

, shifts up permanently. What happens *in the long run* to the growth rate of GDP per capita?

		It becomes zero
		It remains the same as productivity growth,
		It becomes lower than productivity growth,
		It becomes higher than productivity growth,

Question 5

In steady state, the capital/output ratio is equal to:

Question 6

If productivity growth rises, what happens to the steady state level of the capital/output ratio?

		It falls
		It rises
		It becomes zero
		Nothing

Question 7

Imagine that the economy is on a balanced growth path. Then, there is a surprise decrease in the size of the labor force (say from a pandemic), L. What happens *immediately* to the growth rate of GDP per capita?

		It remains the same as productivity growth,
		It becomes zero
		It becomes higher than productivity growth,
		It becomes lower than productivity growth,

Question 9

If the share of GDP used for capital goods is 0.12, the growth rate of productivity is 0.06, the growth rate of population is 0, the depreciation rate is 0.06, the initial capital/output ratio is 0.9, and the elasticity of GDP with respect to capital is 0.3, then what is the growth rate of the capital/output ratio? Use 3 decimal places.

Question 10

If the share of GDP used for capital goods is 0.02, the growth rate of productivity is 0.07, the growth rate of population is 0.04, the depreciation rate is 0.07, the initial capital/output ratio is 2.67, and the elasticity of GDP with respect to capital is 0.4, then what is the growth rate of the GDP per capita? Use three decimal places.

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