10 Questions
What are the factors of production in the neoclassical growth model?
Labour L and capital K
What is the per capita consumption equation in the neoclassical growth model?
c = C/L
What is the relationship between the production per worker and the number of workers in the neoclassical growth model?
The number of workers in an economy does not affect the production per capita or the capital intensity.
What is the equation for the demand for goods per capita in the neoclassical growth model?
y = c + i
What is the equation for the consumption function in the neoclassical growth model?
c = (1 - s) y
What is the steady state level of capital stock per capita called?
k*
What is the impact of depreciation on the capital intensity?
Depreciation reduces the capital intensity.
How does the savings rate affect the growth path of an economy outside the steady state?
An increase (decrease) of the savings rate causes a rise (fall) of the per capita capital stock in the economy and thereby a higher (lower) output.
What does the equation ∆(k) = sf(k) – δ k – n k represent?
Changes in capital stock = Investment - Depreciation - Provision of new workers with capital
What does the assumption of population growth with a rate of n imply for the per capita capital stock equation?
The per capita capital stock equation changes: ∆(k) = sf(k) – δ k – n k
This quiz covers the neoclassical approach to growth, focusing on the Solow-growth model and key definitions such as factors of production, production per worker, capital intensity, per capita consumption, per capita investments, and savings ratio. It also delves into the interpretation of linear-homogeneous production function in the empirical macroeconomics context.
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