C2(i). What does the term ‘creative destruction’ mean? In a Schumpeterian growth model, what determines the growth rate
Posted: Thu May 19, 2022 10:34 am
C2(i). What does the term ‘creative destruction’ mean? In a
Schumpeterian growth model, what determines the growth rate of
productivity? How does this compare to the mechanism driving growth
in the Solow model with technological progress? (18 marks)
(iii) What are likely responses by the Central Bank to these
changes? Discuss how the central bank and the treasury (ministry of
finance) could respond by adjusting monetary and/or fiscal policies
when facing such mass automation challenge (5 points).
C2(ii). For each question, identify the statement as True or
False. You will receive 1 mark for correctly identifying the
statement as True or False (please circle the correct answer) and 3
marks for an explanation of your answer. You may use verbal or
diagrammatic explanation as appropriate. Please note explanations
should not exceed 5 lines.
C2(ii.a). When we add rational expectations to the 3-equation
model, the predictions of the model changes. (4 marks) True or
False? Briefly explain your answer.
C2(ii.b). There is no difference between Tobin’s q theory of
investment and permanent income hypothesis (PIH). (4 marks) True or
False
C2(ii.c) The IS curve becomes flatter with a fall in the
marginal tax rate that decreases the size of the multiplier. (4
marks) True or False
Schumpeterian growth model, what determines the growth rate of
productivity? How does this compare to the mechanism driving growth
in the Solow model with technological progress? (18 marks)
(iii) What are likely responses by the Central Bank to these
changes? Discuss how the central bank and the treasury (ministry of
finance) could respond by adjusting monetary and/or fiscal policies
when facing such mass automation challenge (5 points).
C2(ii). For each question, identify the statement as True or
False. You will receive 1 mark for correctly identifying the
statement as True or False (please circle the correct answer) and 3
marks for an explanation of your answer. You may use verbal or
diagrammatic explanation as appropriate. Please note explanations
should not exceed 5 lines.
C2(ii.a). When we add rational expectations to the 3-equation
model, the predictions of the model changes. (4 marks) True or
False? Briefly explain your answer.
C2(ii.b). There is no difference between Tobin’s q theory of
investment and permanent income hypothesis (PIH). (4 marks) True or
False
C2(ii.c) The IS curve becomes flatter with a fall in the
marginal tax rate that decreases the size of the multiplier. (4
marks) True or False