In the neoclassical growth model, if two countries are exactly the same but one has a higher savings rate, we would expect that country to have
a. higher output, a higher capital-to-labor ratio, and higher output growth in the steady state.
b. higher output, a higher capital-to-labor ratio, and the same output growth in the steady state.
c. the same output and capital-to-labor ratio, but higher output growth in the steady state.
d. higher output, the same capital-to-labor ratio, and the same output growth in the steady state.
B
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Attempts to use activist policies to stabilize the economy can be counter-productive: a. If policy makers do not correctly estimate the natural rate of real output. b. If policy makers misestimate the lags involved in the process
c. If policy makers forecast inaccurately. d. In all of the above cases.
Suppose that over the past year, the real interest rate was 6 percent and the inflation rate was 4 percent. It follows that
a. the dollar value of savings increased at 6 percent, and the purchasing power of savings increased at 2 percent. b. the dollar value of savings increased at 6 percent, and the purchasing power of savings increased at 10 percent. c. the dollar value of savings increased at 10 percent, and the purchasing power of savings increased at 2 percent. d. the dollar value of savings increased at 10 percent, and the purchasing power of savings increased at 6 percent.