1. Consider the Solow growth model with depreciation of capital and labour-force growth. The fundamental equation of the Solow model is: Ak = s f(k) - (n+ô) k rate of labour, and ô = the rate of depreciation of capital. a) Show the steady state value of k in a diagram. What happens to the steady-state value of k when s increases? where s= MPS=APS, k = capital per worker, n= growth b) Other things being the same, what happens to the steady-state value of k as n declines. Show this in a diagram.

1. Consider the Solow growth model with depreciation of capital and labour-force growth. The fundamental equation of the Solow model is: Ak = s f(k) - (n+ô) k rate of labour, and ô = the rate of depreciation of capital. a) Show the steady state value of k in a diagram. What happens to the steady-state value of k when s increases? where s= MPS=APS, k = capital per worker, n= growth b) Other things being the same, what happens to the steady-state value of k as n declines. Show this in a diagram.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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