26.Based on the discussion in Chapters 10 and 11, which of the following must occur to sustain economic growth in the long run?

Select one:

a.technological progress

b.a saving rate at or above the golden rule level

c.capital accumulation

d.Both a and b

e.All of a, b, and c

27.According to the National Income Accounts, Investment can be decomposed into:

Select one:

a.Non-Residential and Residential

b.Durables and non-durables

c.Exports, Imports

d.all of the above

e.none

28.Assume constant population and no technological progress.Suppose two countries are identical in every way with the following exception. Economy A has a higher rate of depreciation () than economy B. Given this information, we know with certainty that

Select one:

a.steady state consumption in A is higher than in B.

b.steady state consumption in A is lower than in B.

c.steady state consumption in A and in B are equal.

d.steady state growth of output per worker is higher in A than in B.

e.none of the above

29.A key assumption of a demand determined output (following Chapter 3) is that:

Select one:

a.firms can not increase production, even if there is a large demand for their products

b.firms can not find production inputs (workers, capital, etc.) to increase their output

c.firms are willing and able to supply any amount of the good at a given price P

d.all of the above

e.none

30.If the nominal interest rate is 20% per year, how much money can an individual borrow today if she can only repay $100 next year?

Select one:

a.$80.00

b.$83.33

c.$120

d.$78.33

31.Disposable income:

Select one:

a.is increasing in taxes

b.is decreasing in income

c.increases if income and taxes increase by the same amount

d.is decreasing in taxes

e.does not depend on income

32.Assume an economy has constant population and no technological progress. As the economy adjusts to an increase in the saving rate, we would expect output per worker

Select one:

a.to increase at a constant rate and continue increasing at that rate in the steady state.

b.to increase at a permanently higher rate.

c.to decrease at a permanently higher rate.

d.to return to its original level.

e.none of the above

33.Assume an economy has constant population and no technological progress. An increase in the saving rate will affect which of the following variables in the long run?

Select one:

a.output per worker

b.capital per worker

c.

the level of investment

d.

all of the above