using the central equation of the Solow model, discuss the influence of At and Kt on country's ability to grow and move to a steady-state level (K*).
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using the central equation of the Solow model, discuss the influence of At and Kt on country's ability to grow and move to a steady-state level (K*).
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- an economy is described by the Solow-Swan model with the following variables, E(t)=1 The saving rate is 0.41 per year. Labor's share of income is 0.44. The growth rate of labor efficiency is 0.03 per year. The growth rate of the labor force is 0.02 per year Depreciation is 0.09 per year. calculate the steady-state value of the capital-to-labor ratio, K/L Enter your answer to two places after the decimal.when a country adds ideas what is it doing to its productivity and GDP? Which variable in the Solow Model equation is it changing?Use the Solow model below to answer the question. Y Y3 Y₂ Y₁ K₁₁ K₂ K3 Y = Af(K,H) dk SY K Suppose that Y₁ is 1,475, Y₂ is 6,184, and Y3 is 10,992. The savings rate for this economy is 30% and the depreciation rate is 8.2%. If this economy is currently at a GDP of 1,475, what is the smallest amount of foreign aid which would move the economy up to a GDP of 10,992? Assume that all foreign aid becomes investment. Round your final answer to two decimal places.
- In the steady-state equilibrium with fixed technology, if the population and labor force are both growing at the rate of two percent per year, the Solow model predicts that: the capital stock will be constant each year. aggregate output will grow at the rate of two percent per year. output per worker will grow at the rate of two percent per year. aggregate output will grow at the rate of one percent per year.Technical Progress in the Solow Model Suppose an economy that follows the assumptions of the Solow model saves a proportion s of its income every period, population grows at rate n, capital depreciates at rate d, and technical progress takes place at rate g. Assume it is not yet at steady state. a) Draw a graph to show initial level of capital k* < kss, output y* as well as the steady state levels of each. Be sure to draw and label the production function, investment and the line of effective depreciation, as well as k*, y*, kss and yss b) Explain what will happen to y* in the short run given this information (i.e. starting where k* < kss), according to the assumptions of the Solow growth model). c)At steady state, what is the growth rate of y*, y and Y? Explain your answersConsider two countries in a Solow economy with growth in population but no growth in technological change. Assume both start from below their steady-state k∗, but one starts further below than the other, and all parameters are identical. On the same diagram, plot transition paths for each country.
- 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 SekectWhat variable(s) below reach a steady state level in the augmented Solow model? One or more answers possible kt kt /htIn country a, the solo SWAN model is very popular. The population growth rate is zero. the GDP is F(K,L)=AK1/2 L1/2 The constant is s=0.2 A=15 L=1 d=0.1 What is the level of steady-state GDP Y*?
- Consistent with the data, the Solow model shows that there is correlation between the population growth rate and real GDP per capita. Selected answer will be automatically saved. For keyboard navigation, press up/down arrow keys to select an answer. a b C a positive a negative zeroanswer part a, b and c please!Consider an economy described by the Solow model with the following production function: Y = F(K, L) = K“ (L)'-« L grows at the rate n, the depreciation rate is 8, and the country saves a constant fraction s of its income. The change in capital per-worker is given by Ak = sy – (n+ 8)k. (a) Derive the per-worker production function. (b) Assuming population growth equals n and the depreciation rate equals 8, find the steady state level of capital per worker. It will depend on a, s, n and 8. Imagine the economy begins at the steady state you found in part b. Then there is a war that destroys a substantial amount of the economy's capital. The war does not affect the size of the labor force, population growth, the depreciation rate, or the saving rate. c) What is the immediate effect of the war on output per worker? Explain. d) After the war, is the growth rate of output per worker higher or lower than it was in steady state? Explain. e) How does the war affect steady state output per…