15. A Solow economy has production function $Y = K^{2/2}(AL )^{2/2}$. The savings rate is 30 percent. Depreciation is 1 percent. The labour force grows at 3 percent per year. Labour augmenting technological progress occurs at 1 percent per year. a. Provide a labelled diagram showing the Steady state equilibrium. b. Steady state GOP per effective worker grows at a rare of percent per year. c. Steady state GOP per worker grows at a rate of percent per year. d. Steady state GOP grows at a rate of percent per year. e. Show the Golden Rule equitibrium on your diagram. show all rough calculation

15. A Solow economy has production function $Y = K^{2/2}(AL )^{2/2}$. The savings rate is 30 percent. Depreciation is 1 percent. The labour force grows at 3 percent per year. Labour augmenting technological progress occurs at 1 percent per year. a. Provide a labelled diagram showing the Steady state equilibrium. b. Steady state GOP per effective worker grows at a rare of percent per year. c. Steady state GOP per worker grows at a rate of percent per year. d. Steady state GOP grows at a rate of percent per year. e. Show the Golden Rule equitibrium on your diagram. show all rough calculation

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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3. In the Golden Rule steady state in a Solow model with population growth, the marginal product of capital (MPK) is equal to the savings rate plus the population growth rate. population growth rate plus the depreciation rate. depreciation rate plus the savings rate. savings rate divided by the marginal product of labor. Savings rate divided by the growth rate.
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1. In the Solow economic growth model, the steady-state K/N ratio transpires a) where sf(k) = (n+d)k b) where the slope of sf(k) equals the slope of (n+d)k c) where cf(k) is maximized d) where cf(k) = o e) band c only 2. The modemization of Solow's economic growth model has defined sf(k) as: a) The break-even investment level b) The capacity-driven investment level c) The minimum capital investment requirement d) The capital-deepening investment level 3. In the Romer endogenous growth model, 44/A a) is not the growth residual determined by endogenous factors b) is not the product of interaction between human capital and innovative changes in knowledge c) is not explained by the methodology of growth accounting d) does not shift the (n+d)k curve upward. 4. Romer's endogenous growth model would not advocate: a) For an increase in government expenditure on targeted research and development b) For an elimination of government expenditure on early childhood education c) For an elimination…
2. It is 1960. China's economy is in its steady state. It is predicted that the Chinese population will expand multi-fold over the next few decades. As an expert in economic growth, you have been called in to provide predictions about the economic effect of such population growth. a. Using the Solow diagram below, illustrate the effect on an increase in population growth on the post-1950 Chinese economy. у, і, б ہے k* Output Investment k Dep + Pop growth b. Explain (briefly) why this policy made sense to the government in 1960.
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If climate change impacts (e.g., increased heat waves, droughts, wildfires, etc.) decrease the economy's technology level A, then, through the lens of the Solow growth model (and assuming the economy was originally in a steady-state), holding all else constant, we would expect it to: O A. Decrease steady-state capital, decrease steady-state output, uncertain impact on steady-state consumption O B. Increase steady-state capital, increase steady-state output, uncertain impact on steady-state consumption OC. No impact on steady-state capital, decrease steady-state output, decrease steady-state consumption O D. Decrease steady-state capital, decrease steady-state output, decrease steady-state consumption If households are worried about climate change and this concern increases their savings rate, then holding all else constant (including A, so focusing only on the change in savings rates), we would expect it to: O A. Increase steady-state capital, increase steady-state output, decrease…
Which method allows us to find the steady state in a Solow economy? By ... a. Removing the time subscripts of all variables b. Setting investment equal to depreciation c. Setting the growth rate of capital equal to zero d. Setting the change in capital equal to zero e. All of the above
which statement \s are true. use graphs to exlain a. In the Solow growth model, the saving rate is a crucial determinant of the economy's long-run growth rate of output per worker. b. In the endogenous growth model , the representative firm sets the wage so that the demand and supply of efficiency units of labour are equal. c. In the endogenous growth model , there is no steady state of the economy as human capital will always continue to grow forever. d. The assumption of Constant Returns to Scale technology implies that the marginal product of factor imput is always decreasing.
In the steady state in the Solow model, which is NOT one of the uses of new capital? a. To replace depreciating capital b. To replace capital exported to other countries c. To provide capital for wore out capital and new workers d. To provide capital for new workers
16 True or False? The key difference between the Solow and production/expenditure models of the economy is that the Solow model endogenizes the saving rate.
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