Figure 6.1: Romer Model: Per Capita Output

question 22

Multiple Choice

Figure 6.1: Romer Model: Per Capita Output
-In the Romer model in Figure 6.1, at time t₀, a change in the growth rate of per capita output can be explained by a(n) :

• A) decrease in the ideas efficiency parameter.
• B) increase in the population.
• C) increase in the share of labor engaged in research.
• D) increase in the saving rate.
• E) decrease in the population.

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Definitions:

Gross Investment

The total amount of money spent on capital goods, or assets intended to produce future income, not accounting for depreciation.

Net Investment

The total amount spent on capital assets, like buildings and machinery, minus depreciation. It reflects the increase in the value of physical assets.

Depreciation

The gradual decrease in the economic value of the capital assets of a firm or nation due to wear and tear, obsolescence, or age, often accounted for in financial statements through depreciation expense.

Disposable Income

Income available to an individual or family after taxes, which can be spent or saved.