Exam 8: Growth,capital Accumulation

If two countries have the same steady-state levels of output,the country that is _____ today will _____ in per capita output.

Unlike physical capital,human capital exhibits increasing returns.

The social benefits of research and development are greater than the private benefits.

A country in a steady state invests 50% of its output in new capital ( = 0.5)and depreciates 5% of its capital stock ( = .05).With a capital stock of 100 units,labor remains constant.Because of technological innovation,production improves from Y = To Y = 2 C:\Users\user\Dropbox\Quizplus Parsing Documents\To Be Parsed\NEW Files\Answers End Chapter sent to mahdi\TB3376,Modern Principles Macroeconomics 3rd Edition by Tyler Cowen\TB3376,Modern Principles Macroeconomics 3rd Edition by Tyler Cowen\Images\Chapter 8 (28)- Growth,Capital Accumulation_16.jpg .What is the new steady-state level of K?

In an economy with no technological advance,economic growth will continue if investment equals depreciation.

Cutting-edge economic growth comes primarily from new ideas,new technologies,or new methods of management.

The Solow growth model predicts that China and other developing countries will eventually surpass the leading economies of the world in terms of their level of real GDP per capita.

The two types of economic growth are:

_____ first developed the model that explains economic growth using a production function.

Imagine an economy with production function Y = F(K)= and 400 units of capital.If the depreciation rate is  = .05,how much capital will deteriorate in the next period?

Currently China is growing at a faster rate than the United States.Eventually,the rate of growth in China will slow down.

Since 1960,the poorest OECD countries have grown the fastest.

Consider an economy with production function Y = 2K^1/2,an investment rate of 10%,and a depreciation rate of 5%.Assume there are no increases in labor,education,or technology.If the capital stock in this economy is currently 9,is this economy above,below,or at its steady state? What does this imply about growth in this economy?

The production function is a mathematical function that shows:

Countries on the "cutting edge" grow primarily by:

Explain why patents are important for innovation.

Explain what the production function represents in the Solow model.

Among countries with similar steady-state output levels,there is a negative relationship between initial income levels and subsequent growth rates.

Explain why entrepreneurs are often viewed as job destroyers.

The most important incentive for research and development of new ideas is the profit opportunity for private entrepreneurs.