In the Romer Model, the Production Function $Y _ { t } = A _ { t } L _ { y t }$

question 110

Multiple Choice

In the Romer model, the production function $Y _ { t } = A _ { t } L _ { y t }$ , where A_t is knowledge and L_yt is the amount of labor in the output sector:

• A) exhibits constant returns to labor and increasing returns to labor and knowledge
• B) exhibits constant returns to labor and increasing returns to knowledge
• C) exhibits increasing returns to labor and constant returns to labor and knowledge
• D) exhibits decreasing returns to labor and constant returns to labor and knowledge
• E) exhibits increasing returns to labor and increasing returns to labor and knowledge

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Definitions:

Foreign Currency

Money or legal tender issued by a country that is not the domestic currency where a particular transaction is taking place.

Exchange Rates

The rate at which one currency is exchanged for another, indicating the quantity of one currency that can be traded for another.

Appreciates

Describes when the value of an asset increases over time in comparison to its original cost.

Eurobond

A bond that is issued in a foreign currency, different from the currency of the country or market where it is being issued.