StChapter 8: Economic Growth l: Capital Accumulation and Population GrowthQuestion: The Solow model suggests that if.. exceeds. ., the capital stock will . andoutput will .... ... until the. . is achieved.a.depreciation / investment/ increase/ decline /steady stateUyKalO b.investment / depreciation/increase /increase / the Golden Rule leveldepreciation /investment /decline/decline/ the Golden Rule levelPd investment / depreciation /increase /increase/steady statedepreciation /investment / decline/increase /steady staterin buraya yazınI\

The solow model would be one of the most crux of the neo classical growth theory. The solow model…

Chapter 8: Economic Growth I: Capital Accumulation and Population Growth Question: The Solow model suggests that if ..... exceeds .... the capital stock will . and output will ..... until the... .... is achieved. depreciation / investment / increase/ decline / steady state O b. investment / depreciation /increase / increase / the Golden Rule level depreciation /investment /decline / decline/ the Golden Rule level Od. investment / depreciation /increase /increase /steady state e. depreciation /investment / decline /increase/steady state

Chapter 8: Economic Growth I: Capital Accumulation and Population Growth Question: The Solow model suggests that if ..... exceeds .... the capital stock will . and output will ..... until the... .... is achieved. depreciation / investment / increase/ decline / steady state O b. investment / depreciation /increase / increase / the Golden Rule level depreciation /investment /decline / decline/ the Golden Rule level Od. investment / depreciation /increase /increase /steady state e. depreciation /investment / decline /increase/steady state

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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4. The Solow model describes: how saving rates are determined the static relationship between capital and output how savings, population growth, and technological change affect output over time how savings, population growth, and technological change affect output in a single period what constitutes technological change
2. Recall that general form of fundamental equation of growth in Solow model is described as follows: k: = s f(k) – (gs + 5)ka %3D Noting that at steady-state ks = 0 and hence a Using the fact kss= 0, show the steady-state graphically and provide economic interpretation of the steady-state condition s- f(k ss) = (gs + 8)k s- b. Using the same graph you draw in part (a) explaim the transitional dynamics of the Solow. Hint: Define what happens if k. ks-
9. Consider our graph of the basic Solow growth model. steady state dk y=F(() F() (-7' in LF equilibrium) On the graph above: y represents real output (or income) per worker; y-F(k) is the production function; is the capital stock per worker; s is the savings rate; 8 is the rate of depreciation of capital; 'i' represents business investment (purchases of capital) per worker); 'LF' stands for Loanable Funds. (For purposed of intuition, think of capital as 'machines.) If we started out with a capital (per worker) stock higher than the steady-state stock (above), we would expect to see which of the following happen over time? Positive growth rates while the capital stock increases. Positive growth rates while the capital stock stays less than the steady-state level. Negative growth rates while the capital stock increases. Positive growth rates while the capital stock decreases. Negative growth rates while the capital stock decreases.
2. a. List the Kaldor Growth Facts. b. Take the Solow Growth model but assume that technology is capital augmenting. Namely, the aggregate production function is Y, = A[(1+r)K,J°N,". Is the Balanced Growth Path of the Solow Model consistent with the Kaldor facts? Note: full credit requires that you solve for the balanced growth rate(s) of variables.
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.
11.The Harrod-Domar model of growth key ingredients are: a.The depreciation rate is endogenous to the level of per capita income. b.The capital-output ratio is decreasing in the level of per capita income in a country. c.The population growth rate is independent of the level of per capita income in a country. d.All of the above
6. The constant returns to scale assumption in the endogenous growth model implies that: A) countries will definitely reach a steady-state equilibrium. B) if there are constant returns to one input alone, there will be increasing returns to scale to all factors of production taken together. C) the production function will have a concave shape. D) the production function will have a convex shape. E) the capital-labour ratio will be constant at the steady-state. 7. In the AD-AS model, in the long-run, a decrease in the real money supply: A) will result in a movement along a horizontal AS curve. B) may be the result of equilibrium prices decreasing following a contractionary fiscal policy. C) causes the actual unemployment rate to fall below the natural rate of unemployment. D) is caused by a decrease in the interest rate. E) decreases consumers’ disposable income. 8. Decreasing government expenditure is effective at: A) increasing the level of output in the short-run,…
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.
(5 points) Suppose that the marginal product of capital satisfies the following condition: lim fr = A > (8 + n)/s. 00 L Show this model in the context of the above Solow growth model. What does this imply about the existence of a steady state? Will growth in per-capita GDP be continual?
I have to change the savings rate, but trying to figure out how to start. Let’s work out 5 periods of a Solow model with labor augmenting productivity (Z) growth. In your toy economy, the savings rate is 10%, and the depreciation rate is 50% (the high depreciation rate will get us to steady-state faster--think of each period as a decade). The population is fixed (treat it as one worker, N=1 forever). You always start off with 1 unit of capital, and TFP = Z = 1 during the first period. Since TFP and population never change, output each period is created this way: Yt = Kt(1/3)Zt(2/3) Consider two worlds: One where labor augmenting productivity (Z) grows 20% per period, and one where labor augmenting productivity (Z) grows 10% per period Answer the following questions for each of the two worlds What is capital each year, in years 1-5? What is GDP each year, in years 1-5? What is the marginal product of capital each year (MPK) in years 1-5? What is the wage in each period? In a steady…
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…