1. Steady state in the Solow model implies that
a. aggregate output is not growing.
b. capital is not growing.
c. labor is not growing.
d. output per effective worker is not growing.
2. The finance gap approach to aid utilizes
a. the Harrod-Domar model
b. the Solow model
c. the Romer model
d. None of the above.
3. According to Easterly, which of the statements below are true:
i. Aid translates into investment one for one for most countries ii. There is a positive relationship between aid and investment in mostdeveloping countries. iii. Investment has increased growth in the short run.
a. Only i.
b. Both i and ii.
c. All of the above.
d. None of the above.
4. Rostow suggested that developing countries needed between 15% and 20% in order to
a. end poverty.
b. decrease inequality.
c. “take-off”
d. increase exports.
5. One reason that the Harrod-Domar model might fail is that
a. Investment is necessary but not sufficient for growth.
b. Investment is sufficient but not necessary for growth.
c. Investment is necessary and sufficient for growth.
6. Growth (in steady state) in output per worker in the Solow model depends on
a. the depreciation rate.
b. the population growth rate.
c. the growth rate of technology.
d. All of the above.