Imagine that one of the long-run effects of the wars currently going on around the world is to make people more conservative such that their savings rates increase. A. Using the Solow model, describe what the short and long-run impacts of this change are? Does consumption go up or down in the short and long-runs? What happens to the capital stock per person? What happens to the growth rate of output per capita in the short and long- runs? B. Now assume that an additional effect of these wars is that the popu- lation growth rate also increases. How does this impact your previous answer?

Imagine that one of the long-run effects of the wars currently going on around the world is to make people more conservative such that their savings rates increase. A. Using the Solow model, describe what the short and long-run impacts of this change are? Does consumption go up or down in the short and long-runs? What happens to the capital stock per person? What happens to the growth rate of output per capita in the short and long- runs? B. Now assume that an additional effect of these wars is that the popu- lation growth rate also increases. How does this impact your previous answer?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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