PART 3
Question 1

Which of the following will cause a reduction in aggregate output?
Answer
a reduction in N
a reduction in K
a worsening in technology
all of the above
0.25 points
Question 2

If Kt+1/N = Kt/N, we know that:
Answer
saving per worker equals depreciation per worker in period t.
saving per worker is less than depreciation per worker in period t.
saving per worker is greater than depreciation per worker in period t.
the saving rate fell in period t.
0.25 points
Question 3

For this question, assume that expected inflation this year is equal to past year’s inflation. Also assume that the unemployment rate has been equal to the natural rate of unemployment for some time. Given this information, we know that:
Answer
the rate of inflation should be zero.
the rate of inflation should neither increase nor decrease.
the rate of inflation should steadily increase.
the rate of inflation should steadily decrease.
the natural rate of unemployment should steadily decrease.
0.25 points
Question 4

The capital-labour ratio will increase when which of the following conditions is satisfied?
Answer
Investment per worker equals saving per worker.
Investment per worker exceeds saving per worker.
Investment per worker exceeds depreciation per worker.
Saving per worker equals depreciation per worker.
Output per worker exceeds capital per worker.
0.25 points
Question 5

Suppose there are two countries that are identical in every way with the following exception: Country A has a lower depreciation rate than country B. Given this information, we know with certainty that:
Answer
the steady state growth rate will be the same in the two countries.
the steady state growth rate will be higher in A than in B.
Capital per worker, K/N,/> will be higher in B.
Output per worker, Y/N, will be higher in B.
0.25 points
Question 6

The following equation can be used to represent how individuals form expectations of…