Graphically illustrate and explain the effects of an increase in the rate of technological progress on the Solow growth model. In your answer, you must clearly label all curves and the initial and final equilibria. In your answer, explain what happens to the rate of growth of output per worker and the rate of growth of output as the economy adjusts to this increase in the rate of technological
progress.
What will be an ideal response?
The increase in the rate of TP will cause the required investment line to become steeper. K/NA and Y/NA will fall over time to some permanently lower level. The increase in the rate of TP will cause the rate of growth of Y and Y/N to increase over time and to reach a permanently higher level.
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How is national output related to national income?
A) Income is greater than output during recoveries and booms. B) Income is greater than output during recessions and depressions. C) Output exceeds income by the amount of unsold goods. D) They are always equal. E) They are only equal when the economy is in equilibrium.
Which of the following persons is most likely to be insured for health care?
A. A minimum-wage teenager working for a fast-food restaurant. B. A skilled worker employed by a large multinational corporation. C. An unemployed retail clerk. D. A part-time groundskeeper for a small manufacturing plant.