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##### ECO - Multiple Choice Questions

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Question;1)A country has a savings rate of 20%, depreciation rate of 0% and a population growth rate of 4%. If it's income per capita is growing at 4% then according to the Harrod-Domer modelA its capital-output ratio is equal to 0.4B total income must grow at 4%C total income must grow at 20%D its capital-output ratio is equal to 2.52)Suppose a country produces 1 million dollars worth of consumer goods and200,000\$ worth of capital goods in 1990. It?s total capital stock is worth 10 \$milliondollars and 5% of this depreciates each year. It's capital stock in 1991 isA 9,700,000B 10,000,000C 9,500,000D 10,200,0003)Suppose a closed economy has a consumption-output ratio of 0.8. Total output is 1 Billion in 1991 and the capital stock equals 5 Billion. It's depreciation rate and population growth rate are both equal to 2%. What is true in 1992?A the capital stock must be smaller than in 1991B consumption will take an even larger share of outputC income will have grownD we do not have enough information to calculate changes from 1990 to 19914)Suppose a country's technology grows at 5% and its population grows at 1%. What is the growth rate of per capital income according to the Solow model if s=20% and depreciation is 2%A if its capital-output ratio is 5 the growth rate of per capita income is 2%B the growth rate of per capita income is 0%C the growth rate of per capita income is 1%D the growth rate of per capita income is 5%

Paper#57656 | Written in 18-Jul-2015

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