1. After purchasing a zero-coupon bond for $965 (its face value if $1000 and it matures in one year), news arrives that interest rates on savings accounts at banks have risen to 6 percent. What will happen to the price of this bond? +$21.60. -$21.60. -$57.60. +$57.60.
2. What is meant by the steady-state level of capital? All of a nation's capital is reinvested back into that country. Positive net capital investment continues to drive growth at a steady state. There is no new net investment, or any growth. Investment eventually exceeds depreciation.
3. The production function expresses a relationship between capital stock and risk. output and growth. inflation and growth. output and the factors of production.
4. The story of economic growth in China and the United States illustrates which of the following concepts? Catch-up growth for China depended on its own development of new technology. China grew rapidly by creating the technology that later transferred to the United States. The United States' growth rate is lower than China's because the United States is engaged in heavy capital accumulation. U.S. creation of new technology did not allow for as much short-run economic growth as did China's accumulation of existing technology.
5. According to the Solow model, a country will grow faster when its capital stock is at the steady-state value. above the steady-state value. just below the steady-state value. far below the steady-state value.