Name: _ Date: _1.The Solow growth model describes:A)how output is determined at a point in time.B)how output is determined with fixed amounts of capital and labor.C)how saving, population growth, and technological change affect output over time.D)the static allocation, production, and distribution of the economys output.2.Unlike the long-run classical model in Chapter 3, the Solow growth model:A)assumes that the factors of production and technology are the sources of the economys output.B)describes changes in the economy over time.C)is static.D)assumes that the supply of goods determines how much output is produced.3.In the Solow growth model, the assumption of constant returns to scale means that:A)all economies have the same amount of capital per worker.B)the steady-state level of output is constant regardless of the number of workers.C)the saving rate equals the constant rate of depreciation.D)the number of workers in an economy does not affect the relationship between output per worker and capital per worker.4.The production function y = f(k) means:A)labor is not a factor of production.B)output per worker is a function of labor productivity.C)output per worker is a function of capital per worker.D)the production function exhibits increasing returns to scale.5.When f(k) is drawn on a graph with increases in k noted along the horizontal axis, the:A)graph is a straight line.B)slope of the line eventually gets flatter and flatter.C)slope of the line eventually becomes negative.D)slope of the line eventually becomes steeper and steeper.6.When f(k) is drawn on a graph with increases in k noted along the horizontal axis, the slope of the line denotes:A)output per worker.B)output per unit of capital.C)the marginal product of labor.D)the marginal product of capital.7.Two economies are identical except that the level of capital per worker is higher in Highland than in Lowland. The production functions in both economies exhibit diminishing marginal product of capital. An extra unit of capital per worker increases output per worker:A)more in Highland.B)more in Lowland.C)by the same amount in Highland and Lowland.D)in Highland, but not in Lowland.8.The consumption function in the Solow model assumes that society saves a:A)constant proportion of income.B)smaller proportion of income as it becomes richer.C)larger proportion of income as it becomes richer.D)larger proportion of income when the interest rate is higher.9.In the Solow growth model of Chapter 8, the demand for goods equals investment:A)minus depreciation.B)plus saving.C)plus consumption.D)plus depreciation.10.In the Solow growth model of Chapter 8, where s is the saving rate, y is output per worker, and i is investment per worker, consumption per worker (c) equals:A)syB)(1 s)yC)(1 + s)yD)(1 s)y i11.In the Solow growth model of Chapter 8, investment equals:A)output.B)consumption.C)the marginal product of capital.D)saving.12.In the Solow growth model of Chapter 8, for any given capital stock, the _ determines how much output the economy produces and the _ determines the allocation of output between consumption and investment.A)saving rate; production functionB)depreciation rate; population growth rateC)production function; saving rateD)population growth rate; saving rate13.In the Solow growth model the saving rate determines the allocation of output between:A)saving and investment.B)output and capital.C)consumption and output.D)investment and consumption.14._ cause(s) the capital stock to rise, while _ cause(s) the capital stock to fall.A)Inflation; deflationB)Interest rates; the discount rateC)Investment; depreciationD)International trade; depressions15.Investment per worker (i) as a function of the saving ratio (s) and output per worker (f(k) may be expressed as:A)s + f(k).B)s f(k).C)sf(k).D)s/f(k).16.Exhibit: Output, Consumption, and InvestmentIn this graph, when the capitallabor ratio is OA, AB represents:A)investment per worker, and AC represents consumption per worker.B)consumption per worker, and AC represents investment per worker.C)investment per worker, and BC represents consumption per worker.D)consumption per worker, and BC represents investment per worker.17.If the capital stock equals 200 units in year 1 and the depreciation rate is 5 percent per year, then in year 2, assuming no new or replacement investment, the capital stock would equal _ units.A)210B)200C)195D)19018.In the Solow model, it is assumed that a(n) _ fraction of capital wears out as the c