How would each of the following changes affect the steady-state values of the capital—labor ratio, output per worker, and consumption per worker? (a) A change in the composition of the capital stock raises the depreciation rate
(b) A change in social mores lowers the population growth rate. (c) Government tax policies change to encourage a higher saving rate. (d) A supply shock reduces productivity sharply.
(a) The rise in d reduces the capital—labor ratio, as well as output per worker and consumption per worker.
(b) The decline in n raises the capital—labor ratio, as well as output per worker and consumption per worker.
(c) The rise in s raises the capital—labor ratio, as well as output per worker and consumption per worker.
(d) The decline in productivity shifts the production function down, reducing the capital—labor ratio, as well as output per worker and consumption per worker.
You might also like to view...
Beth has just quit her job, moved to a new city, and is looking for a new job. Beth is
A) frictionally unemployed. B) structurally unemployed. C) distance unemployed. D) cyclically unemployed. E) locationally unemployed.
Monopolistic competition is characterized by many buyers and sellers, product differentiation, and barriers to entry
a. True b. False Indicate whether the statement is true or false