This is the second homework assignment on chapter 7. This too is due on Monday, March 7. Please show your answers on the answer sheet.

Name: __________________________________ Date: _________________

1.|Assume two economies are identical in every way except that one has a higher saving rate. According to the Solow-Swan growth model, in the steady state the country with the higher saving rate will have ______ level of total output and ______ rate of growth of output per worker as/than the country with the lower saving rate.|
A)|the same; the same|
B)|the same; a higher|
C)|a higher; the same|
D)|a higher; a higher|

2.|Examination of recent data for many countries shows that countries with high saving rates generally have high levels of output per person because:|
A)|high saving rates mean permanently higher growth rates of output.|
B)|high saving rates lead to high levels of capital per worker.|
C)|countries with high levels of output per worker can afford to save a lot.|
D)|countries with large amounts of natural resources have both high output levels and high saving rates.|

3.|The Golden Rule level of capital per worker is the steady state level of capital per worker with the highest level of:|
A)|output per worker.|
B)|capital per worker.|
C)|savings per worker.|
D)|consumption per worker.|

4.|In the Solow-Swan growth model of an economy with population growth but no technological change, if population grows at rate n, then the total stock of capital grows at rate ______ and total output grows at rate ______.|
A)|n ; n|
B)|n ; 0|
C)|0 ; 0|
D)|0 ; n|

5.|In the Solow-Swan growth model of an economy with population growth but no technological change, if population grows at rate n, total output grows at the rate ______ and output per worker grows at rate ______.|
A)|n ; n|
B)|n ; 0|
C)|0 ; 0|
D)|0 ; n|

6.|Assume two