5. In the context of the Solow Growth model without technological progress and with no population growth, use graphs to explain the effects of a reduction in the depreciation rate on: a. Output and capital per worker over time. b. GDP growth over time. c. Consumption over time. 6. In a country that produces output per-capita according to y = k1/2 with a savings rate of 0.15 and a depreciation rate of 0.1. a. What are the steady-state levels of capital, output and consumption per worker per worker? b. If the savings increases to 0.3, what are the new steady-state levels of capital, output and consumption per worker? c. Now compare your results in a) and b) with a production function y = 2/3
5. In the context of the Solow Growth model without technological progress and with no population growth, use graphs to explain the effects of a reduction in the depreciation rate on: a. Output and capital per worker over time. b. GDP growth over time. c. Consumption over time. 6. In a country that produces output per-capita according to y = k1/2 with a savings rate of 0.15 and a depreciation rate of 0.1. a. What are the steady-state levels of capital, output and consumption per worker per worker? b. If the savings increases to 0.3, what are the new steady-state levels of capital, output and consumption per worker? c. Now compare your results in a) and b) with a production function y = 2/3
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter20: Economic Growth
Section: Chapter Questions
Problem 33P: An economy starts off with a GDP per capital of 12,000 euros. How large will the GDP per capita be...
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Transcribed Image Text:5. In the context of the Solow Growth model without technological progress and with no
population growth, use graphs to explain the effects of a reduction in the depreciation rate on:
a. Output and capital per worker over time.
b. GDP growth over time.
c. Consumption over time.
6. In a country that produces output per-capita according to y = k1/2 with a savings rate of 0.15
and a depreciation rate of 0.1.
a. What are the steady-state levels of capital, output and consumption per worker per
worker?
b. If the savings increases to 0.3, what are the new steady-state levels of capital, output
and consumption per worker?
c. Now compare your results in a) and b) with a production function y = 2/3
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