1. Recall our discussion in Solow growth model, which of the following is the most difficult to measure? Changes in ________.

the size of the labor force

population

the quantity of labor

productivity

1. In the Solow model, the faster growth of output that results from an increase in the saving rate is temporary, because ________.

of diminishing marginal product of capital

with a larger stock of capital, consumption is encouraged more than investment

the rising capital stock depreciates at a faster rate

the economy settles into a steady state in which saving no longer rises

1. If the inflation rate target is 2%, the current inflation rate is also 2%, and the output gap is zero, then according to the Taylor rule, the nominal federal funds rate should be ________ percent.

A. zero

B. two C. four D. three