Click the 1con the View Ihromation aboucthe Iniial hmodel used nere. Show that it is possible for income per person to grow indefinitely. Also show that an increase in the savings rate increases the growth rate in per capita in terms of s, z, d, and n, the growth rate of income per person is If the value of this expression is M then income per person will grow; th
Click the 1con the View Ihromation aboucthe Iniial hmodel used nere. Show that it is possible for income per person to grow indefinitely. Also show that an increase in the savings rate increases the growth rate in per capita in terms of s, z, d, and n, the growth rate of income per person is If the value of this expression is M then income per person will grow; th
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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![Alter the Solow growth model so that the production technology is given by Y= zK, where Y is outputi, Kis capital, and z is total factor productivity. Thus, output is
produced only with capital.
Click the icon the view information about the initial model used here.
a. Show that it is possible for income per person to grow indefinitely. Also show that an increase in the savings rate increases the growth rate in per capita income.
In terms of s, z, d, and n, the growth rate of income per person is
If the value of this expression is
M then income per person will grow; this can
continue indefinitely because
b. An increase in the savings rate
the growth rate in per capita income (assuming z>0).
c. What are some differences between this model and the basic Solow growth model? (Select all that apply.)
DA In this model, the marginal product of capital is increasing in capital.
B. in this model, the marginal product of capital is constant in capital.
O C. In this model, it is possible for total factor productivity to grow indefinitely without an exogenous change.
O D. In this model, it is possible for income per person to grow indefinitely without an exogenous change.
D E. in this model, the marginal product of capital is decreasing in capital.
OF. in this model, it is possible for capital per person to grow indefinitely without an exogenous change.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F025c86f6-3a75-413d-be7b-106741943800%2F8ec1439e-a7f6-40ef-9b88-6f6df63e0cad%2Fdajkkk5_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Alter the Solow growth model so that the production technology is given by Y= zK, where Y is outputi, Kis capital, and z is total factor productivity. Thus, output is
produced only with capital.
Click the icon the view information about the initial model used here.
a. Show that it is possible for income per person to grow indefinitely. Also show that an increase in the savings rate increases the growth rate in per capita income.
In terms of s, z, d, and n, the growth rate of income per person is
If the value of this expression is
M then income per person will grow; this can
continue indefinitely because
b. An increase in the savings rate
the growth rate in per capita income (assuming z>0).
c. What are some differences between this model and the basic Solow growth model? (Select all that apply.)
DA In this model, the marginal product of capital is increasing in capital.
B. in this model, the marginal product of capital is constant in capital.
O C. In this model, it is possible for total factor productivity to grow indefinitely without an exogenous change.
O D. In this model, it is possible for income per person to grow indefinitely without an exogenous change.
D E. in this model, the marginal product of capital is decreasing in capital.
OF. in this model, it is possible for capital per person to grow indefinitely without an exogenous change.
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