Problem Set 3
1)     What is human capital, and how is it different from strictly the quantity of workers available for work? Name three ways to increase a nation’s human capital. Is an increase in the size of the labor force also an increase in the human capital? Explain your answer.
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2)     The Rule of 70 applies in any growth rate application. Let’s say you have $1000 in savings and you have three alternatives for investing these funds.
a.      A savings account earning 1% interest per year.
b.     A U.S. Treasury bond mutual fund earning 3% interest per year.
c.      A stock market mutual fund earning 8% interest per year.
d.     How long would it take to double your savings in each of these 3 accounts?
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3)Â Â Â Â Â Modern economic theory points to three sources of economic growth. What are these three sources? Give an example of each.
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4)Â Â Â Â Â Explain why a nation cannot continue to grow forever just by adding capital.
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5)Â Â Â Â Â The Solow model focus on how resources affect output. This module/week, youfocused on capital.
a.      Name the other two major categories of resources.
b.     Draw an aggregate production function with a typical shape; label this function F. (label all curves and axis).
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c.      Draw a second production function that indicates a technological advancement; label this new function F1. (label all curves and axis).
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Posted 02 May 2017 06:05 PM
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