A2-2(c)Comparing your answers for change in capital stock from year 1 to 2 and from year7 to 8 (Please See Highlights in Chart Below):What can you conclude about the speed of output growth as a countryapproaches its steady state?Year Capital (k) Output (v-k12) Investment Depreciation(vy)(ok)1231616.0216.396416.589516.7786 16.9637 17.1448 17.3224.0004.0254.0494.0734.0964.1194.1414.1621.0001.0061.0121.0181.0241.0301.0351.0400.8000.8100.8200.8290.8390.8480.8570.866Change incapital stock(yy-6k)0.2000.1960.1920.1890.1850.1820.1780.174

Comparing your answers for change in capital stock from year 1 to 2 and from year 7 to 8 (Please See Highlights in Chart Below): What can you conclude about the speed of output growth as a country approaches its steady state? Year Capital (k) Output (y=k¹2) Investment (yy) Depreciation (ok) Change in capital stock (yy-6k)

Comparing your answers for change in capital stock from year 1 to 2 and from year 7 to 8 (Please See Highlights in Chart Below): What can you conclude about the speed of output growth as a country approaches its steady state? Year Capital (k) Output (y=k¹2) Investment (yy) Depreciation (ok) Change in capital stock (yy-6k)

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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Question

A2-2(c)
Comparing your answers for change in capital stock from year 1 to 2 and from year
7 to 8 (Please See Highlights in Chart Below):
What can you conclude about the speed of output growth as a country
approaches its steady state?
Year Capital (k) Output (v-k12) Investment Depreciation
(vy)
(ok)
1
2
3
16
16.02
16.396
4
16.589
5
16.778
6 16.963
7 17.144
8 17.322
4.000
4.025
4.049
4.073
4.096
4.119
4.141
4.162
1.000
1.006
1.012
1.018
1.024
1.030
1.035
1.040
0.800
0.810
0.820
0.829
0.839
0.848
0.857
0.866
Change in
capital stock
(yy-6k)
0.200
0.196
0.192
0.189
0.185
0.182
0.178
0.174

Expert Solution

Step 1

Steady state level is reached where per capita variables such as output per worker, capital per worker no longer see change.

The growth rate slows down when economy is near the steady state.

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A2-4 Suppose that there are two countries, X and Y, which differ in both their rates of investment and their population growth rates. In Country X, investment is 25% of GDP and the population grows at 0% per year. In Country Y, investment is 5% of GDP, and the population grows at 5% per year. The two countries have the same levels of productivity, A. In both countries, the rate of depreciation, 8, is 10%. Use the Solow model to calculate the ratio of their steady state levels of income per capita, assuming that production function follows a constant return to scale Cobb-Douglas function with a = 1/3?
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NB: Kindly answer all questions
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