ECON 302 Intermediate Microeconomic Theory II
exam 2 study questions and correct answers new
update Concordia University
, ECON 302 Intermediate Microeconomic Theory II exam 2 study questions and correct answers
new update Concordia University
Two economies are identical except that the level of capital per worker is higher in Highland
than in Lowland. The production functions in both economies exhibit diminishing marginal
product of capital. An extra unit of capital per worker increases out per worker: - CORRECT
ANSWER more in Lowland
_________ cause(s) the capital stock to rise, while _________ cause(s) the capital stock to fall
- CORRECT ANSWER Investment; depreciation
In the Solow growth model, if investment exceeds depreciation, the capital stock will
_________ and output will ________ until the steady state is attained - CORRECT ANSWER
increase; increase
If a war destroys a large portion of a country's capital stock but the savings rate is unchanged,
the Solow model predicts that output will grow and that the new steady state will approach: -
CORRECT ANSWER the same level of output per person as before
Assume two economies are identical in every way except that one has a higher savings rate.
According to the Solow growth model, in the steady state the country with the higher savings
rate will have ______ level of output per person and _____ rate of growth of output per
worker as/than the country with the lower population growth. - CORRECT ANSWER a higher;
the same
Assume two economies are identical in every way except that one has a higher population
growth rate. According to the Solow growth model, in the steady state the country with the
higher population growth rate will have a ______ level of output per person and ______ rate
of growth of output per worker as/than the country with the lower population growth rate. -
CORRECT ANSWER lower; the same
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