Suppose Country A currently has more output andcapital than Country B. However, Country A has notechnological growth while Country B has persistenttechnological growth. Assume that the two countriesare similar in all other variables. According to the Solowgrowth model with technological progress, we canexpect that:O a. At some future point, Country B will have ahigher income per capita.O b. In the steady state, Country B will reach thesame income per capita as Country A.All the other statements are false.c.O d.Since they have different steady states, thegrowth of output per effective worker in bothcountries will have different rates.

The Solow growth model that is also known as the neoclassical growth model or the exogenous growth…

Suppose Country A currently has more output and capital than Country B. However, Country A has no technological growth while Country B has persistent technological growth. Assume that the two countries are similar in all other variables. According to the Solow growth model with technological progress, we can expect that: At some future point, Country B will have a higher income per capita. O b. In the steady state, Country B will reach the same income per capita as Country A. All the other statements are false. O c. O d. Since they have different steady states, the growth of output per effective worker in both countries will have different rates.

Suppose Country A currently has more output and capital than Country B. However, Country A has no technological growth while Country B has persistent technological growth. Assume that the two countries are similar in all other variables. According to the Solow growth model with technological progress, we can expect that: At some future point, Country B will have a higher income per capita. O b. In the steady state, Country B will reach the same income per capita as Country A. All the other statements are false. O c. O d. Since they have different steady states, the growth of output per effective worker in both countries will have different rates.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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a) What do steady state and conditional convergence mean? b) Why do these happen according to the Solow Growth Model? c) How can a country that is already at a steady state continue to grow?
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Solo growth model questions 1.) a. In a Solow growth model that is expressed in per capita terms, what happens to the marginal product of capital as an economy's capital/labor ratio increases? b. In a Solow growth model that is expressed in per capita terms, when an economy is in its steady state, what do you expect to happen to the capital-labor ratio? c. In a Solow growth model that is expressed in per capita terms, what happens to the capital/labor ratio when the savings rate rises? d.In a Solow growth model that is expressed in per capita terms, what happens to the capital/labor ratio when economywide productivity (this is our "A" variable) rises?
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