Multiple choices text and solution Exercise 1

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In the equaƟon sf(k*)= (𝛿+n)k* of the Solow model, k* represents:  The steady state from which the country will never depart.  The steady state without technological change  One of the possible mulƟple equilibria  The amount of foreign aids needed to reach the best equilibrium. CoordinaƟon failure is:  A state of affairs in which complementariƟes do not exist  A state of affairs in which complementariƟes are exploited only by some agents  A state of affairs in which agents’ inability to coordinate their choices leads them to a state of non-equilibrium.  A state of affairs in which agents’ inability to coordinate their choices leads to an equilibrium that leaves all agents worse off than in alternaƟve situaƟon that is also an equilibrium. The main stakeholder(s) involved in SEZ regimes is/are:  Government  Zone operator  All the answers are correct  SEZ authority  Zone user  Zone developer According to Moses Abramovitz’s analyses:  Catching up could not be observed as countries diverge over Ɵme  Underdeveloped countries have only to follow a certain set of rules of development to take off into self-sustaining growth  Catching up occurs through “leapfrogging”  Catching up could be observed over long periods and depends on technological congruence and social capabiliƟes In the S-shaped graph of the privately raƟonal decision:  Equilibria correspond to all the intersecƟons between the 45° line and the privately raƟonal decision curve  Two equilibria are unstable, and all the others are stable equilibria  Only the lowest equilibrium (the so-called poverty trap) is stable  Only the highest equilibrium is stable In the Lewis theory of economic development:  Agriculture has a role as it provides labor and food to the industry  Growth will converge to a stable…