Multiple Choice Questions:
1)A country has a savings rate of 20%, depreciation rate of 0% and a population growth rate of 4% . If it's income per capita is growing at 4% then according to the Harrod-Domer model
A its capital-output ratio is equal to 0.4
B total income must grow at 4%
C total income must grow at 20%
D its capital-output ratio is equal to 2.5
2) Suppose a country produces 1 million dollars worth of consumer goods and 200,000$ worth of capital goods in 1990. It's total capital stock is worth 10 $million dollars and 5% of this depreciates each year. It's capital stock in 1991 is
A 9,700,000
B 10,000,000
C 9,500,000
D 10,200,000
3) Suppose a closed economy has a consumption-output ratio of 0.8. Total output is 1 Billion in 1991 and the capital stock equals 5 Billion. It's depreciation rate and population growth rate are both equal to 2%. What is true in 1992?
A the capital stock must be smaller than in 1991
B consumption will take an even larger share of output
C income will have grown
D we do not have enough information to calculate changes from 1990 to 1991
4) Suppose a country's technology grows at 5% and its population grows at 1%. What is the growth rate of per capital income according to the Solow model if s=20% and depreciation is 2%
A if its capital-output ratio is 5 the growth rate of per capita income is 2%
B the growth rate of per capita income is 0%
C the growth rate of per capita income is 1%
D the growth rate of per capita income is 5%