Consider the Solow model. Suppose an economy begins in steady state. By what proportion does per capita GDP change in the long run in response to each of the following changes? (a) The population falls by 10%. (b) The depreciation rate increases by 3% and the productivity level rises by 2%. (c) The investment rate and the depreciation rate both decrease by 5%.

Consider the Solow model. Suppose an economy begins in steady state. By what proportion does per capita GDP change in the long run in response to each of the following changes? (a) The population falls by 10%. (b) The depreciation rate increases by 3% and the productivity level rises by 2%. (c) The investment rate and the depreciation rate both decrease by 5%.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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