An affluent country's income per capita is consistently growing at a pace higher than that of less developed countries. According to the Solow growth model, which of the following can likely explain this? (i) The affluent country is relatively closer to its steady state level. (ii) The affluent country has more rapid technological growth. (iii) The affluent country has a lower saving rate. 4 O a. Only (ii) O b. Only (iii) O c. Only (1) O d. (i), (ii), and (iii)

An affluent country's income per capita is consistently growing at a pace higher than that of less developed countries. According to the Solow growth model, which of the following can likely explain this? (i) The affluent country is relatively closer to its steady state level. (ii) The affluent country has more rapid technological growth. (iii) The affluent country has a lower saving rate. 4 O a. Only (ii) O b. Only (iii) O c. Only (1) O d. (i), (ii), and (iii)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

A. Investment in "infrastructure" represents spending on: O roads, bridges, canals, etc. O human capital (education) O government institutions O innovation to physical capital B. Which of the following was not one of Thomas Malthus' assumptions regarding population and economic growth? O Per-capita income would increase. O The economy was agriculturally based O The supply of land was fixed O The population would continue to increase
3
When a tax is levied on a good, what happens to the market price and why? Select one: O a The market price rises because both quantity demanded and quantity cross out supplied falls. O b. The market price falls because quantity supplied falls. cross out O. The market price falls because quantity demanded falls. cross out O d. The market price rises because both quantity demanded and quantity cross out supplied rises.
1
Suppose Country A currently has more output and capital than Country B. However, Country A has no technological growth while Country B has persistent technological growth. Assume that the two countries are similar in all other variables. According to the Solow growth model with technological progress, we can expect that: O a. At some future point, Country B will have a higher income per capita. O b. In the steady state, Country B will reach the same income per capita as Country A. All the other statements are false. c. O d. Since they have different steady states, the growth of output per effective worker in both countries will have different rates.
167. Explain how rapid population growth can contribute to rapid economic growth even when Solow and other models all show that population growth reduces the level of income in the early stage. *3-4 paragraphs*
(a) Two countries, Country A and Country B, are described by the Solow growth model. Both countries are identical, except that the rate of labor-augmenting technological progress is higher in A than in B. i. In which country is the steady-state growth rate of output per effective worker higher? ii. Does the Solow growth model predict that the two economies will converge to the same steady state? p (b) Based on the Solow growth model with population growth and labor-augmenting technological progress, explain how each of the following policies would affect the steady-state level and steady-state growth rate of total output per person: i. an increase in the government's budget deficit poits) inis) ii. grants to support research and development (c) Consider a Solow model where the production function no longer exhibits diminishing returns to capital accumulation. Assume the production function is now Y = AK. What happens to the growth rate of per capita GDP over time? (6pints)
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.
which one(s) is true (a) If an economy can raise its annual real GDP growth rate from 3.8 percent to 4.5 percent, its real GDP doubling time is reduced by 15 years. (b) Suppose that the government passes a law requiring households to increase savings 10% above previous levels. According to Solow's growth theory, in the long run output per capita will grow less rapidly. (c) If an economy has a real GDP doubling-time of 48 years, this will be increased to 56 years if annual GDP growth is reduced by 3.2 percentage points. (d) If K = 3000, n = 0.02, and depreciation, δ= 0.04 and g =0.03, then investment of 320 will hold (K/AL) constant.
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…
In this problem, we distinguish between labor and population in the Solow growth model. A proportion of the population, a, between zero and one, works. The production function is now written as Y = A(K^1/3)[(aL)^2/3] (a) How does an increase in a from 0.3 to 0.6 change steady state GDP? (b) Does it change the steady-state capital? Explain. (c) Suppose a rises steadily over time. How do you think would affect the growth rate of GDP?
12. According to Solow's model of economic growth, what determines the growth rate of income per person for a nation that is not in its steady state? What determines the growth rate of income per person for a nation that is in its steady state? In what sense is technological progress necessary for sustained growth of income per person in Solow's model?