Question

19. In the Solow model with a positive rate of population growth n and technological progress z, the steady state level of total real output Y grows at the rate:
    a. n.
    b. zero.

    c. z.
    d. n + z.

20. In the Solow model with a positive rate of population growth n and technological progress z, the steady state level of per worker real output y grows at the rate:
    a. n.
    b. zero.

    c. z.
    d. n + z.

21. In the Solow model with a positive rate of population growth n and technological progress z, the steady state level of real output per effective worker y grows at the rate:
    a. n.
    b. zero.

    c. z.
    d. n + z.

22. Total factor productivity is defined as the residual between the:
    a. average growth rate of the factors of production and the growth rate of real output. b. growth rate of labor and the growth rate of real output.
    c. growth of capital and the growth of labor.
    d. growth rate of output and the growth rate of population.

23. It is often said that the Solow model predicts conditional convergence, not absolute convergence, because convergence is conditional on:
    a. rates of saving
    b. rates of depreciation.

c. rates of technological progress. d. rates of population growth.
e. All of the above.

Answer 1

1. D) n+z

In solow model, the steady state level of total real output Y grows at the rate of n+z. The output grows by the rate of increase in the population and increase in technology.

2. D) n+z

In solow model, the steady state level of per worker real output y grows at the rate of n+z as the per worker output depends on both the population rate and technology.

3. C) z

In solow model, the steady state level of real output per effective worker y grows at the rate z. Technology leads to an increase in the efficiency of the workers thus the level of real output per effective worker grows at the rate z.

4. A) average growth rate of factors of production and growth rate of real output.

The total factor productivity is the residual between the growth rate of real output and the growth rate of inputs which are labor and capital.

5. D) rate of population growth.

Convergence is conditional on the rate of population growth. Under this, nations having the same rate of savings but different rates of population growth will converge to the same level of output at some point of time. Thus convergence is conditional on the rate of population growth.