Suppose that two countries share identical levels of total factor productivity, identical labor force growth rates and identical savings rates. According to the Solow model
A) the country with the greater initial level of output per worker will grow more rapidly than the country with the smaller initial level of output per worker.
B) the country with the smaller initial level of output per worker will grow more rapidly than the country with the greater initial level of output per worker.
C) both countries will have the same growth rates of output per worker, even if they start out with different levels of output per worker.
D) if both countries start out with different levels of income per worker, both countries may have different growth rates of output per worker, but we cannot be certain which country will have the higher growth rate of output per worker.
B
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Some factors that allow firms to make economic profits are beyond its control. All but one of the following is an uncontrollable factor. Which factor is controllable?
A) chance events B) consumer tastes C) product differentiation D) input prices
The fact that output gaps will not last indefinitely, but will be closed by rising or falling inflation is the economy's:
A. income-expenditure multiplier. B. self-correcting property. C. short-run equilibrium property. D. long-run equilibrium property.