Investment exceeds depretiatio 43 With additional education

Investment exceeds depretiatio 43. With additional education, the marginal product of human capital: increases at an increasing rate. increases at a decreasing rate. remains constant. decreases. 44. According to the Solow model, a country will grow faster when its capital stock is: O at the steady-state value. above the steady-state value. just below the steady-state value far below the steady-state value. 45. Because of spillovers, the social benefit of research and development: is greater than the private benefit. O is less than the private benefit. is equal to the private benefit. may be less than, greater than, or equal to the private benefit. Remaining: 13:30:00 Start: 9:39 PM 96 2 8 4 6

Solution

43) a) Increases at an increasing rate. As the educational opportunities increases and the institutions get better the human capital increases and also technological advancements are present. The production function shifts upward and this increases the marginal product of human capital at an increasing rate.

44) d) Far below the steady-state value. Steady state value is a condition of an economy where there are no new net investments made and according to Solow model when marginal product of capital decreases there is no reason to build and when the capital stock is far below this steady state value, the country grows faster.

45) a) Is greater than the private benefit.