Consider the Solow model with no technological progress Assume that depreciation equals 0.20, population rowth is 0.10, and that the capital-output ratio K/Y equals 0.7. Finally, assume that the savings rate is 30% (e. a0.3). Then, it is impossible to know whether the economy is at the Golden Rule level without more information the economy's steady state capital per worker is exactly at the Golden Rule level the economy's steady state capital per worker is above the Golden Rule level the economy's steady state capital per worker is below the Golden Rule level

Consider the Solow model with no technological progress Assume that depreciation equals 0.20, population rowth is 0.10, and that the capital-output ratio K/Y equals 0.7. Finally, assume that the savings rate is 30% (e. a0.3). Then, it is impossible to know whether the economy is at the Golden Rule level without more information the economy's steady state capital per worker is exactly at the Golden Rule level the economy's steady state capital per worker is above the Golden Rule level the economy's steady state capital per worker is below the Golden Rule level

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter20: Economic Growth In The Global Economy

Section: Chapter Questions

Problem 4P

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A4.
Assume a production function in the Solow model is given by= AK,"L, A-Z– 1, the depreciation rate is 0.05, and the investment rate is 0.1. Then the steady-state level of capital is about: Select one: O a. 2.8 O b. 0.8 1.6 O d. 0.3 O e. 1.3
Assume that a country's per-worker production is y = k1/2, where y is output per worker and kis capital per worker. Assume also that 10 percent of capital depreciates per year (= 0.10) 2 andthere is no population growth or technological change.a. If the saving rate (s) is 0.4, what are capital per worker, production per worker, andconsumption per worker in the steady state?b. Solve for steady-state capital per worker, production per worker, and consumption perworker with s = 0.6.c. Solve for steady-state capital per worker, production per worker, and consumption perworker with s = 0.8.d. Is it possible to save too much? Why?
Consider the Solow Model with no population or technological growth. Suppose that two countriesare identical except that in Country A the depreciation rate is greater than the depreciation rate inCountry B.a. How do you compare the steady state level of capital per worker in these countries? Illustrategraphically. Explain the economic intuition for the di erences in capital per worker in steadystate.b. Which country a higher output per worker in steady state? What about investment per workerin steady state? Explain carefully.
3 pts in the Solow model, the economy reaches a steady-state because as capital per worker increases O savings per worker is constant, while the population growth rate is contare and the depreciation rate of capital decen, ing that the economy w gro endogenously while the population growth rate and the depreciation rate of capital are comitant implying that the economy will converge to a sady O marginal savings per worker diminishes, while the population growth rate and the depreciation rate of capital are constant implying that the economy will gro endogenously Osaving perv state. O marginal savings per worker diminishes, while the population growth rate and the depreciation rate of capital are constant, implying that the economy will converge to a steady-state
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Consider the Solow-Swan model. Which of the following statements is FALSE? O The higher the saving rate the higher the steady state level of capital per worker O In steady state, output per worker does not depend on the level of total factor productivity O The higher the depreciation rate the lower the steady state level of capital per worker If investment is greater than total depreciation, the capital stock increases
QUESTION 22 whereas in the Solow model In the Romer model, the balanced growth path is equal to OAG-A; the steady-state level of capital is zero OB.0; infinity ; the growth rate declines as economy approaches the steady state O D. the level of the number researchers in an economy; capital is scarce OE. g=lL: there is a steady state G H. K. V. M Control Alt 無要換 Alt
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Consider a Solow growth model with a human capital augmented production function Y, = AK" H N-a- %3D Suppose that both physical and human capital are accumulated with constant savings rates sx and Sy respectively and depreciate at the common rate 8, that is K+1 - K, = sKY, - 8K, and H1 - H, = SKY, - SH, There is no growth in productivity A or raw labor N. "Suppose A = 1, a = ß = 1/4, sx = Sn = 0.12 and ô = 0.06. Let (a) y = YIN, k = KIN and h = HIN denote output per worker, physical capital per worker, and human capital per worker respectively. Let = hlk denote the intensity of human capital relative to physical capital. Calculate y, k, h and o in steady state. (b) . output per worker of the analogous Solow model without human capital (i.e., with Y, = AK" N- and A = 1, a = 1/2, s 0.12 and ô = 0.06. Explain the differences. How does steady state output per worker in this economy compare to the steady state * I Now consider the case a = 1/4 and ß = 3/4 with all the other parameters as in…