Author Question: Suppose that two countries share identical levels of total factor productivity, identical labor ... (Read 338 times)

abarnes · **on:** Jun 30, 2018

Suppose that two countries share identical levels of total factor productivity, identical labor force growth rates and identical savings rates. According to the Solow model

A) the country with the greater initial level of output per worker will grow more rapidly than the country with the smaller initial level of output per worker.
B) the country with the smaller initial level of output per worker will grow more rapidly than the country with the greater initial level of output per worker.
C) both countries will have the same growth rates of output per worker, even if they start out with different levels of output per worker.
D) if both countries start out with different levels of income per worker, both countries may have different growth rates of output per worker, but we cannot be certain which country will have the higher growth rate of output per worker.

Question 2

Increases in ________ typically lead to decreases in private saving.

A) the interest rate
B) disposable income
C) autonomous consumption
D) all of the above
E) none of the above