Question

Question 9 of 14

(Question 8 continued) The government decides to increase the tax level. Keeping other conditions unchanged, when compared to the original equilibrium (as in Question 8), the national income in the new equilibrium will
A. increase
B. decrease
C. hard to say
Question 10 of 14
Suppose we are considering a Solow Model without technology progress.
Population growth rate=0.03
The capital accumulation is sY-dK
s=0.1, d=0.02
Please calculate the capital per capita under the steady state.
A. 2
B. 4
C. 6
D. 8
E. 16
F. None of the above
Question 11 of 14
The settings are the same as in Question 10. Please calculate the marginal product of labor at the steady state.
A. 4/3
B. 4
C. 2
D. 8
E. 1

Answer 1

The national income in the new equilibrium will decrease.
The capital per capita under the steady state is 6.
The marginal product of labor at the steady state is 2.