Suppose the Parameters of the Romer Model Take the Following

question 66

Multiple Choice

Suppose the parameters of the Romer model take the following values:
,
,
,and
) What is the per capita income of this country in the initial period,
?

• A)about 12.1
• B)about 11.9
• C)about 12.0
• D)about 1.19
• E)about 9.9

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Definitions:

Capital Cost Allowance

The annual depreciation expense that a company can claim as a deduction for tax purposes on its capital assets.

Cannibalization

The reduction in sales volume, sales revenue, or market share of one product as a result of the introduction of a new product by the same producer.

Pre-Tax Cash Flow

The amount of cash that a company generates before accounting for taxes, used in evaluating its financial performance.

WACC

Weighted Average Cost of Capital; a calculation of a firm's cost of capital where each category of capital is proportionately weighted.