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Consider the Solow growth model seen in lectures.
Use n to denote population growth.
Which of the following is true in steady state?
a. |
ΔK/K= ΔY/Y= 0 ; Δk/k= Δy/y= 0 |
|
b. |
ΔK/K= ΔY/Y= 0 ; Δk/k= Δy/y= n |
|
c. |
ΔK/K= ΔY/Y= n ; Δk/k= Δy/y= 0 |
|
d. |
ΔK/K= ΔY/Y= n ; Δk/k= Δy/y= n |
|
e. |
None of the above |
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- Consider the following numerical examples for the Solow Growth Model: Economy A z=1 s=0.5 F(K,N)=K0.3N0.7 n=0.01 d=0.1 Economy B z=1 s=0.2 F(K,N)=K0.3N0.7 n=0.01 d=0.1 In which economy is GDP per capita higher in steady state? O Economy A O Economy B O Not enough InformationConsider the following numerical examples for the Solow Growth Model: Economy A z=1 s=0.5 F(K,N)=K0.3N0.7 n=0.01 d=0.1 Economy B z=1 s=0.2 F(K,N)=K0.3N0.7 n=0.01 d=0.1 In which economy is Consumption per capita higher in steady state? O Economy A O Economy B Not enough InformationDraw a well labeled graph that illustrates the steady state of the solow model with population growth. Use the graph to find what happens to steady state capital per worker and income per worker in response to each of the following exogenous changes D. A one time permanent improvement in technology increases the amount of output that can be produced from any given amount of capital and labor. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
- Draw a well- labeled graph that illustrates the steady state of the Solow model with population growth. Use the graph to find what happens to steady-state capital per worker and income per worker in response to each of the following exogenous changes. A change in weather patterns increases the depreciation rate. b. Better birth-control methods reduce the rate of population growth.Suppose an economy described by the Solow model is in steady state with population growth n of 1.8 percent per year and technological progress g of 1.8 percent per year. total output and total capital grow at 3.6 percent per year. suppose further that the capital share of output is 1/3. if you used the growth accounting equation to divide output growth into three sources- capital, labor, and total factor productivity- how much would you attribute to each source? compare your results to the figures we found for the united states in tables 9-2.Consistent with the data, the Solow model shows that there is correlation between the population growth rate and real GDP per capita. Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a b C a positive a negative zero
- a. Show graphically what happens in the Solow Model when population growth increases. Label your graph clearly. b. Explain clearly the impact of this increase in population growth on i. income per capita ii. the growth rate of income per capita (in transition and at the new steady state) iii. the growth rate of total GNP.Which of the following is an incorrect statement about the variable ‘s’ in the Solow Growth Model? a.s is the fraction of income that is saved b.s is an exogenous factor c.s is referred to as saving per worker d.s determines how income is allocated between consumption and investmentQuestion 4:a. Identify two assumptions of the basic Solow Growth Model. b. Why are these assumptions important in supporting the Solow Model? c. You are given the following information about an economy.Y = C + IY = F(K, L)The aggregate production function for this economy exhibits constant returns to scale and the marginal products of labor and capital are both subject to diminishing returns.s = saving rate (assume this is constant) per yearδ= depreciation rate (assume this is a constant) per yeary = Y/Lk = K/Lk* = steady state of capital per worker (K/L) and sf(k) < δk.i. What is sf(k)? ii. What is δk?iii. Interpret the meaning of sf(k) < δk? iv. Graphically illustrate sf(k), δk, and k*. Indicate on your graph where sf(k) < δk.v. Explain what happens in this economy when sf(k) < δk.
- An economy described by the Solow growth model has the following production function: y = Vk A. Solve for the steady-state value of y as a function of s, n, g, and d. B. A developed country has a saving rate of 28 percent and a population growth rate of 1 percent per year. A less developed country has a saving rate of 10 percent and a population growth rate of 4 percent per year. In both countries, g = 0.02 and d= 0.04. Find the steady- state value of y for each country. C. What policies might the less developed country pursue to raise its level of income?In the Solow growth model:1. What is the equilibrium effect of an increase in the population growth rate?2. What is the equilibrium effect of an increase in TFP?3. Which of these shocks is better able to generate sustained growth: a decrease in thepopulation growth rate, or an increase in TFP? How does this compare with theresults of the Malthusian model of economic growth?Q5 Suppose in a Solow model, we have the following parameter values: n = 0, s = 0.5, a = 0.3. There is no growth in the total factor productivity so that A, = A = 1. Moreover, we know that at time 0, the economy is at a steady state so that k = k, =1. Now imagine that a foreign power invaded this %3D country. 1% of the population was killed and another 14% of the population fleeded the country to avoid violence. Moreover, 15% of capital stocks were destroyed. All of this happens in period t=1. After that, the war ended and there was no more destruction of capital or loss of population (but the refugee permanently settled outside of the country and will never return0. What is the growth rate of per-capita output in period t =4?