Intermediate Macroeconomics, Chapter 4 nel,1274.4 Exercisessbicod hasdioeoolslngo) S. seeaYei ted loo-ddo i noonu noitouh ngExercise 4.1 (The U.S. Population Slowdown and Income Per Capita).noitaluqoq bnn losig)U.S. Population in Selected Yearso bns boirsq aifsbom wolo2 adt oYearToMood o (n or1870anbron ber boaont1871Population in millionsottslogobiw40.24tadn toq lesiqes41.10S c 2015abon hec321.08wolod ards lo eoteteng sdi lo eod ai A bas A paiepa sige323.302016V ent por yolssa Jobomtheal output1. Using the information provided in the table, calculate the populationbojon growth rate between 1870 and 1871 and between 2015 and 2016. Denotethese two numbers n and n', respectively.sTbalonab bast baslo Todmun odt tadd osogqueI>o > 0 dtiw T = (.T) s90.1),2. Suppose that the depreciation rate is 10 percent per year (8 =0odT (n+I)=14.e adt boinoq roq 0

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ENGR.ECONOMIC ANALYSIS

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Chapter1: Making Economics Decisions

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Intermediate Macroeconomics, Chapter 4 nel,
127
4.4 Exercisessbi
cod hasdioeoolslngo) S. seea
Yei ted loo-ddo i noonu noitouh ng
Exercise 4.1 (The U.S. Population Slowdown and Income Per Capita).
noitaluqoq bnn losig)
U.S. Population in Selected Years
o bns boirsq ai
fsbom wolo2 adt o
Year
ToMood o (n or
1870
anbron ber boaont
1871
Population in millions
ottslogobiw
40.24
tadn toq lesiqes
41.10
S c 2015
abon hec
321.08
wolod ards lo eoteteng sdi lo eod ai A bas A paiepa sige
323.30
2016
V ent por yo
lssa Jobom
the
al output
1. Using the information provided in the table, calculate the population
bojon growth rate between 1870 and 1871 and between 2015 and 2016. Denote
these two numbers n and n', respectively.sTbalonab bast bas
lo Todmun odt tadd osogqueI>o > 0 dtiw T = (.T) s9
0.1),
2. Suppose that the depreciation rate is 10 percent per year (8 =
0odT (n+I)=14.e adt boinoq roq 0<od odd Ja awong atlhow
that the savings rate is 25 percent (o = 0.25), and that the production
boxit ai basl lo tmuos sdT .olderota ton at dugdro bas letiqsa leievilo on ai
function is of the Cobb-Douglas form, that is, Y = AK L-a, where
19dmn baxt s ai T oodw boirsq lle 1ol T-T,ai terld omit vo
Yt, Kt, and Lt denote, respectively, output, the stock of capital, and
population in period t, and a and A are constant parameters. Assume
0.3. Let y* and y* denote the steady-state output per capita
boirog daso how teg juquo ba
that a =
associated withn and n', respectively. Calculate the percentage in-
oVili crease in long-run output per capita caused by a permanent fall in the
population growth rate from n to n', that is, calculate (y*/y* -1) × 100.
3. Provide intuition.
boioq lone ni uoilqauanoo bnilA

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Step 1: Define Economic Growth

Economic growth refers to the sustained increase in an economy's capacity to produce goods and services over time, typically measured by the growth rate of Gross Domestic Product (GDP). It reflects the expansion of an economy's overall output, income levels, and living standards, and it is a key indicator of long-term prosperity and development.

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