A) Suppose there are two countries that are identical in every way with the following exception: Country A has a higher saving rate than country B. Given this information, we know with certainty that A) Country A will experience capital widening b) growth rate of output per sopita in the steady state is same in two countries c) K/N is higher in country B d) growth rate of output per capita in the steady state is higher in country A
A) Suppose there are two countries that are identical in every way with the following exception: Country A has a higher saving rate than country B. Given this information, we know with certainty that
A) Country A will experience capital widening
b) growth rate of output per sopita in the steady state is same in two countries
c) K/N is higher in country B
d) growth rate of output per capita in the steady state is higher in country A
B) When expectations are taken into account, a policy to reduce budget deficit may not lead to a fall in output in the current period. Which of the followings cannot be listed as factor that offsets the detrimental impact of fiscal contraction on the output in the short run?
a) Increasing tax rates harshly to finance deficit.
b) Credibility of the deficit reduction program.
c) Cutting wasteful spending and leaving room for future tax cuts.
d) Backloading the deficit reduction, leaving larger cuts in government spending to the future while only small cuts today.
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