Author Question: In the endogenous growth model presented in the text, suppose that u represents the fraction of time ... (Read 85 times)

cherise1989

  • Hero Member
  • *****
  • Posts: 555
In the endogenous growth model presented in the text, suppose that u represents the fraction of time spent working (as opposed to accumulating human capital) and b represents the efficiency of human capital accumulation.
 
  The growth rate of human capital equals A) u(1 - b) - 1.
  B) 1 + b(1 - u).
  C) (1 + b)(1 - u).
  D) b(1 - u) - 1.

Question 2

Suppose the economy is just recovering from a recession and all signs now point to robust growth. How might this transition from recovery to expansion be reflected in the monetary policy curve?
 
  What will be an ideal response?



tuate

  • Sr. Member
  • ****
  • Posts: 332
Answer to Question 1

D

Answer to Question 2

The monetary policy curve will have been relatively low, as policy makers kept interest rates as low as possible to hasten recovery from the recession. Once the recession is over, the monetary policy curve will shift up, since low interest rates are no longer appropriate, and to reduce the danger that spending will climb too rapidly and cause inflation to rise. The curve may become steeper, as well, so that any increases in inflation are countered by substantial increases in the real interest rate.



Related Topics

Need homework help now?

Ask unlimited questions for free

Ask a Question
 

Did you know?

Blood in the urine can be a sign of a kidney stone, glomerulonephritis, or other kidney problems.

Did you know?

Drugs are in development that may cure asthma and hay fever once and for all. They target leukotrienes, which are known to cause tightening of the air passages in the lungs and increase mucus productions in nasal passages.

Did you know?

The people with the highest levels of LDL are Mexican American males and non-Hispanic black females.

Did you know?

The newest statin drug, rosuvastatin, has been called a superstatin because it appears to reduce LDL cholesterol to a greater degree than the other approved statin drugs.

Did you know?

In 2010, opiate painkllers, such as morphine, OxyContin®, and Vicodin®, were tied to almost 60% of drug overdose deaths.

For a complete list of videos, visit our video library