In the Solow growth model without population growth and technological progress, consumption per worker will be maximized in the steady state when: (1) Output per worker is maximized. (ii) Investment per worker is maximized. (iii) The marginal product of capital equals the depreciation rate. Oa (1), (i), and (iii) O b. Only () O c. Only (ii) Od. Only (1)

In the Solow growth model without population growth and technological progress, consumption per worker will be maximized in the steady state when: (1) Output per worker is maximized. (ii) Investment per worker is maximized. (iii) The marginal product of capital equals the depreciation rate. Oa (1), (i), and (iii) O b. Only () O c. Only (ii) Od. Only (1)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume that the saving rate s is equal to 24%, the population growth rate n is 2% and the depreciation rate d is 2%. Assume also that output per worker is given by: y = k0.5. Then, output per worker in steady state is equal to: 05 36 O 100 06
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4.The Solow growth model differs from the Harrod-Domar because: a.Assumes that depreciation rate and population growth are exogenous b.Assumes that the rate of technological progress varies from country to country. c.Predicts that permanent growth is achievable only through technological progress d.Predicts that poorer countries will grow faster than richer countries.
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7. Explain how the Solow growth model differs from models of endogenous growth with respect to the sources of technological progress. Give at least one policy implication of the Endogenous growth models.
If the current capital stock per person in South Korea is greater than the current capital stock per person in China and total factor productivity is the same in both countries, according to the Solow model: O a. China initially will grow slower than South Korea, but each will have the same steady state Ob. China initially will grow faster than South Korea, but each will have the same steady state О с. Both South Korea and China initially will grow at the same rate and have the same steady state O d. China initially will grow faster than South Korea and will have a lower steady state О . China initially will grow faster than South Korea and will have a higher steady state
1) Assume an economy without population growth or technological progress. Their production function is given by y = 35k0.5. Their currency capital stock is 100, and the depreciation rate is 17.5%. Give a savings rate such that: Income per worker will grow over the current period а. b. Income per worker stay the same over the current period c. Income per worker will fall over the current period
15. A Solow economy has production function $Y = K^{2/2}(AL )^{2/2}$. The savings rate is 30 percent. Depreciation is 1 percent. The labour force grows at 3 percent per year. Labour augmenting technological progress occurs at 1 percent per year. a. Provide a labelled diagram showing the Steady state equilibrium. b. Steady state GOP per effective worker grows at a rare of percent per year. c. Steady state GOP per worker grows at a rate of percent per year. d. Steady state GOP grows at a rate of percent per year. e. Show the Golden Rule equitibrium on your diagram. show all rough calculation
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