According to standard economic theory, higher wages lead to higher labour supply if...

people have enough unearned income.

leisure and consumption are poor substitutes.

In Solow’s growth model,

convergence to the balanced growth path is faster the higher the depreci- ation rate is.

the depreciation rate has no effect on the level of GDP per head.

convergence to the balanced growth path is slower the higher the depre-ciation rate is.

a change in the depreciation rate has no effect on the growth rate of out-put, even in the short run.

Quiz

Erik bramme 2 questions Updated 26 Nov 2018

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1According to standard economic theory, higher wages lead to higher labour supply if...
1. Aleisure is a normal good.
2. Bpeople have enough unearned income.
3. Cleisure is a luxury good.
4. Dleisure and consumption are poor substitutes.
2In Solow’s growth model,
1. Athe depreciation rate has no effect on the level of GDP per head.
2. Bconvergence to the balanced growth path is faster the higher the depreci-
  ation rate is.
3. Cconvergence to the balanced growth path is slower the higher the depre-ciation rate is.
4. Da change in the depreciation rate has no effect on the growth rate of out-put, even in the short run.