Question 6 tal depreciation exceeds gross investment, the economy is its steady state and output per person is growing ata positve rate

ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
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Qutuion 6&7 only

Consider an economy described by the textbook Solow model with the following Cobb-Douglas production function:
Y = ÅK°L*.
%3D
where a
The economy is producing 100 units of output and the productivity parameter is equal to 1. the depreciation rate is 6%, the investment rate is 24%, and there are
64 workers, the growth rate of total output Y, is positive
and the economy is converging to
to its steady-state output per
capita of 100
units.
Question 6
total depreciation exceeds gross investment, the economy is below
its steady state and outout per person is growing at a
positve
rate
Question 7
Starting from steady state a permanent decrease in the rate of depreciation in the Solow model causes output per capita to Select)
in the
short nun in the long run the growth rate of the economy
Sekect
Transcribed Image Text:Consider an economy described by the textbook Solow model with the following Cobb-Douglas production function: Y = ÅK°L*. %3D where a The economy is producing 100 units of output and the productivity parameter is equal to 1. the depreciation rate is 6%, the investment rate is 24%, and there are 64 workers, the growth rate of total output Y, is positive and the economy is converging to to its steady-state output per capita of 100 units. Question 6 total depreciation exceeds gross investment, the economy is below its steady state and outout per person is growing at a positve rate Question 7 Starting from steady state a permanent decrease in the rate of depreciation in the Solow model causes output per capita to Select) in the short nun in the long run the growth rate of the economy Sekect
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