MCQ QUESTIONS:

In the Solow growth model when investment rate exceeds the golden rule level,

a. consumption per person at the steady state is at the optimal level.

b. marginal product of capital at the steady state is higher than depreciation rate plus population growth rate.

c. marginal product of capital at the steady state is equal to depreciation rate plus population growth rate.

d. consumption per person at the steady state can be increased if investment rate is reduced.

We sometimes observe that a rich country grow faster than a poor one. Which of the following statements explains this observation?

a. The law of diminishing marginal product of capital sometimes does not hold.

b. All statements are relevant.

c. The rich country is further away from its steady state than the poor one.

d. The rich country does not have a steady state.