ECON402 Study Guide - Quiz Guide: Balanced-Growth Equilibrium, Unemployment Benefits, Market Clearing
20 May 2018
School
Department
Course
Professor
Name___________________________
Student # ______________________
University of Waterloo
Department of Economics
ECON 402
Prof. Kate Rybczynski
Term Test 1
June 10, 2014
Instructions:
NO CALCULATORS.
It is a closed book exam and no “cheet sheets” are permitted.
TURN OFF ALL CELL PHONES!
You have 80 minutes to complete the exam.
There are 6 pages and 3 questions. Answer all parts of the 3 questions in the space provided.
EXPLAIN for full marks.
If you have any questions, do not hesitate to ask.
ECON 402 – Term Test 1 - Spring, 2015 page 1of 6
1. Consider the Basic Solow-Swan Model. And let
f(k)=kα
.
(Assume that the economy is initially located at kgr*)
a) Show graphically the golden rule level of kgr*. Explain (but do not derive) why this k* is the
golden rule level. (2)
b) Show graphically (and explain) what happens to kgr* if the population growth rate, n, falls. (2)
ECON 402 – Term Test 1 - Spring, 2015 page 2of 6
