15) In the Solow diagram, an increase in the depreciation rate will

A) cause the actual investment line to pivot up

B) cause the break-even investment line to pivot up

C) result in a higher steady state k*

D) will perrmanently decrease the growth rate of output per worker (Y/N)

16) According to the Solow model, the variable that determines the steady state growth rate of output 16) per worker (Y/N) is

A) the savings rate

B) the population growth rate

C) the growth rate of effectiveness of labor

D) the level of government expenditur

17) The Keynesian tradition is based on

A) the idea that the private sector is less competent than the government in deciding which products to produce.

B) extending the quantity theory to incorporate new variables that affect inflation

C) the belief that the instability of the private sector creates business cycles

D) the complete rejection of both classical and mercantilist thought.

18) Empirical evidence indicates that

A) consumption is more volatile than investment.

B) interest rates change very slowly over time.

C) an increase in population leads to increases in output per worker.

D) interest rates are procyclical.

19) In the classical model,

A) the interest rate sensitivity of money demand is zero

B) aggregate demand is unstable

C) expansionary monetary policies will reduce aggregate demand.

D) increases in government spending will result in higher consumption and investment

15) In the Solow diagram, an increase in the depreciation rate will 15) A) cause the actual investment line to pivot up B) cause the break-even investment line to pivot up C) result in a higher steady state k* D) will perrmanently decrease the growth rate of output per worker (Y/N) 16) According to the Solow model, the variable that determines the steady state growth rate of output 16) per worker (Y/N) is A) the savings rate B) the population growth rate () the growth rate of effectiveness of labor D) the level of government expenditure 17) The Keynesian tradition is based on 17) A) the idea that the private sector is less competent than the government in deciding which products to produce. B) extending the quantity theory to incorporate new variables that affect inflation C) the belief that the instability of the private sector creates business cycles D) the complete rejection of both classical and mercantilist thought. 18) Empirical evidence indicates that 18) A) consumption is more volatile than investment. B) interest rates change very slowly over time. C) an increase in population leads to increases in output per worker. D) interest rates are procyclical. 19) In the classical model, 19) A) the interest rate sensitivity of money demand is zero B) aggregate demand is unstable C) expansionary monetary policies will reduce aggregate demand. D) increases in government spending will result in higher consumption and investment