Question
I. Multiple choice questions: Q1. In the Solow model, holding the size of labour force L constant, when the capital stock K increases, (a) the
I. Multiple choice questions:
Q1. In the Solow model, holding the size of labour force L constant, when the capital stock K increases, (a) the marginal product of capital increases;
(b) the marginal product of capital decreases;
(c) the marginal product of capital does not change;
(d) none of the above.
2. According to the Solow growth model, if the national savings rate increases:
(a) the economy will grow at a faster rate forever;
(b) the capital per worker will grow faster forever;
(c) the economy will grow at a faster rate in the short run, and a new, higher, steady state level of capital per worker will be reached;
(d) the capital per worker will eventually decline.
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