2. In the Solow model, (a) Show that output equals the amounts paid to production factors; (b) Does the BGP exhibit constant rate of return and constant factor output shares; (c) If the economy starts below the BGP, as k evolves, what is the rate of change of the wage rate w and the rate of return r?
2. In the Solow model, (a) Show that output equals the amounts paid to production factors; (b) Does the BGP exhibit constant rate of return and constant factor output shares; (c) If the economy starts below the BGP, as k evolves, what is the rate of change of the wage rate w and the rate of return r?
Chapter9: Production Functions
Section: Chapter Questions
Problem 9.11P
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Transcribed Image Text:2. In the Solow model, (a) Show that output equals the amounts paid to
production factors; (b) Does the BGP exhibit constant rate of return and
constant factor output shares; (c) If the economy starts below the BGP, as
k evolves, what is the rate of change of the wage rate w and the rate of
return r?
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