Figure 5.6 A

question 115

Multiple Choice

Figure 5.6 a.
an increase in the depreciation rate.
d.
a decrease in the capital stock.
b.
a positive TFP shock.
e.
both a and c.
c.
a decline in the saving rate.
-The principle of transition dynamics can be summarized as:

• A) the further below its steady state an economy is, the faster the economy will grow.
• B) the closer to its steady state an economy is, the faster the economy will grow.
• C) the further below its steady state an economy is, the slower the economy will grow.
• D) regardless of how close to its steady state an economy is, the economy grows at the same rate.
• E) if the economy is very close to the steady state, it stops growing.

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Definitions:

Marginal Benefit

The increased enjoyment or advantage received from the consumption of one extra item of a good or service.

Economics Grade

A measurement or assessment of a student's understanding and proficiency in the subject of economics, typically given as part of an academic evaluation.

Marginal Benefit

The increased pleasure or advantage received from the consumption or creation of an additional unit of a good or service.

Marginal Benefit

The supplementary enjoyment or value derived by a person upon consuming an extra unit of a particular good or service.