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12 Cards in this Set
- Front
- Back
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If z = x/y then
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g of z = g of x - g of y
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If z = xy then
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g of z = g of x + g of y
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If z = x^a then
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g of z = a * g of x
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What is the Cobb-Douglas production function?
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Y = A* K ^1/3 * L^2/3
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What do the exponents on the Cobb-Douglas production function add up to?
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1!
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What is the equation for output per person in the production function when equilibrium is reached?
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y* = A * k^1/3
(output per person is equal to TFP times capital to the 1/3) |
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What does the productivity function predict about income levels?
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Much smaller differences in income are predicted than exist in reality if you don't adjust for TFP.
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What returns to scale does this have? Y = K + L
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Constant
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What returns to scale does this have?
Y = K^1/3 *L^2/3 - A |
Increasing
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What returns to scale does this have?
Y = K^1/2 * L^1/2 |
Constant
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What is the mechanism in the Solow model that generates growth?
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Increase in the steady-state position through new investment or higher TFP.
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What are transition dynamics?
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When a country is far below its steady state, it grows faster. When it is closer, it grows slower.
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