Movements away from equilibrium in the Solow model:
A) persist and cannot be corrected.
B) are corrected only through government intervention.
C) are automatically corrected.
D) are corrected only when the country opens up to international trade.
C
You might also like to view...
According to this Application, because Argentina pegged its currency to the U.S. dollar, the appreciation of the dollar caused a large trade deficit in Argentina. This trade deficit meant that
A) the demand for Argentinean pesos exceeded the supply of the pesos. B) the demand for Argentinean pesos exceeded the supply of U.S. dollars. C) the supply of Argentinean pesos exceeded the demand for the pesos. D) the supply of Argentinean pesos exceeded the demand for U.S. dollars.
It is often stated that the Japanese firms develop and adapt new technology to manufacturing process twice as fast as U.S. firms. If this is true, ceteris paribus, we would conclude that the
A) depreciation rate of capital does not change, but the user cost of capital increases. B) depreciation rate of capital increases, but the user cost of capital decreases. C) depreciation rate of capital increases, and the user cost of capital increases. D) U.S. interest rate is too high, preventing American manufacturers from adopting new technologies.