Are these statements true, false or uncertain? Explain your answers 1. Writing t

Question

Are these statements true, false or uncertain? Explain your answers 1. Writing the production function in terms of capital and effective labor implies that as the level of productivity increase by 10%, the number of workers required to achieve the same level of output decrease by 10%. 2. If productivity growth increases, the investment rate (ratio of investment to output) must increase in order to keep capital per effective worker constant. 3. In steady state, output per effective worker grows at the rate of population growth 4. In steady state, output per worker grows at the rate of productivity change. 5. A higher saving rate implies a higher level of capital per effective worker in the steady state and thus a higher rate of growth of output per effective worker.

Explanation / Answer

1. Writing the production function in terms of capital and effective labor implies that as the level of productivity increase by 10%, the number of workers required to achieve the same level of output decrease by 10% it is true because Writing the production function in terms of capital and effective labor implies that as the level of technology increases by a certain percentage, the number of workers required to achieve the same level of output decreases by the same percentage 2.yes true investment in the economy, thus resulting in faster economic growth so productivity growth increases 3. output is growing at the rate of the rate of population growth but output per effective worker remains same so false 4. yes true since output per worker increases, however, since each worker has more capital. 5.yes true because worker capital will increase

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