EC2016 Intermediate Macroeconomics Assignment-City, University of London

Instructions to students:

All questions are compulsory

Each question is 3 marks

TASK: EC2016 Intermediate Macroeconomics Assignment

Question 1.

Which feature do the Solow and Malthus models share?

  1. Population growth is exogenous.
  2. The production function has decreasing marginal returns.
  3. There is capital accumulation.
  4. Households save.


Question 2.

In the Golden Rule steady state, the marginal product of capital is equal to the

  1. savings rate plus the population growth rate.
  2. population growth rate plus the depreciation rate.
  3. depreciation rate plus the savings rate.
  4. savings rate divided by the marginal product of labor.


Question 3.

The first fundamental theorem of welfare economics states that

  1. under certain conditions, a competitive equilibrium is Pareto optimal.
  2. a competitive equilibrium is always Pareto optimal.
  3. under certain conditions, a Pareto optimum is a competitive equilibrium.
  4. a Pareto optimum is always a competitive equilibrium


Question 4: EC2016 Intermediate Macroeconomics Assignment-City, University of London

Barriers to Riches, by S. Parente and E. Prescott, emphasizes the importance of

  1.  barriers to technological adoption.
  2. barriers to the development of natural resources.
  3. public education.
  4. endogenous growth.


Question 5.

In a simple model with a proportional tax on labour income, the Laffer curve tells us:

  1. tax revenue is always rising as the tax rate increases.
  2. tax revenue is always declining as the tax rate increases.
  3. what is the best tax rate the government should choose
  4. .there can be two equilibria associated with the same amount of tax revenue.


Question 6.

What immediate consequence does an increase in education time have in the endogenous growth model with human capital?

  1. lower output in the future.
  2. lower wages.
  3. lower output.
  4. lower human capital.

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