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when a country adds capital what is it doing to its productivity and GDP? Which variable in the Solow Model equation is it changing?
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- [TRUE or FALSE] Other things constant, a technological change (i.e., increased productivity) in the Solow model increases the steady state level of capital and output per worker. True FalseHow do macroeconomic theories evolve? What is the Solow growth model? How does technology affect growth? Why are institutoins the key to economic growth?> Consider the data in the table below: Per capita GDP, 2017 Saving rate (%) TFP (Ā) United States 1.000 23.5 1.000 Switzerland 1.151 28.8 1.052 Answer the following questions using the Solow growth model. 9. Assuming no differences in TFP (ignore the last column) and no differences in the rate of depreciation between the U.S. and Switzerland, use the data in the table to predict the ratio of per capita GDP of Switzerland relative to that of the U.S. in the steady states. How much percent richer is Switzerland than the U.S. in steady state? 10. Now do the same exercise assuming TFP is given by the levels in the last column. Now how much percent richer is Switzerland than the U.S. in steady state? Consider the data in the table below: Per сapita GDP, 2017
- Assume a country is in steady state. Explain what will happen id a disaster hit the country and destroyed 40% of its capital stock, but nobody is killed. Draw the diagram of solow model.I have to change the savings rate, but trying to figure out how to start. Let’s work out 5 periods of a Solow model with labor augmenting productivity (Z) growth. In your toy economy, the savings rate is 10%, and the depreciation rate is 50% (the high depreciation rate will get us to steady-state faster--think of each period as a decade). The population is fixed (treat it as one worker, N=1 forever). You always start off with 1 unit of capital, and TFP = Z = 1 during the first period. Since TFP and population never change, output each period is created this way: Yt = Kt(1/3)Zt(2/3) Consider two worlds: One where labor augmenting productivity (Z) grows 20% per period, and one where labor augmenting productivity (Z) grows 10% per period Answer the following questions for each of the two worlds What is capital each year, in years 1-5? What is GDP each year, in years 1-5? What is the marginal product of capital each year (MPK) in years 1-5? What is the wage in each period? In a steady…Explain the Solow Model when there is an improvement of technology
- = 2. Consider a Solow growth model in which the production function is Yt AK²N₁¹/2, where A = 1. Moreover, assume that the depreciation rate is d = 0.02, the rate of population growth is n = 0.02, and the saving rate is s = = 0.2. a. Compute the value of the capital stock per worker in steady state. b. Draw a graph that represents the steady-state equilibrium of the model. c. Suppose that the capital-labor ration in year t is 90. What will the level of the capital- labor ratio be in year t+1? Will it increase or decrease in future periods? Explain. d. Compute the rate of change of the capital labor ratio between time t and t + 1. How does it compare to the rate of growth of the capital-labor ratio in steady state?Consider the following Solow diagram, indicating two sep-arate savings rates, 0.2 and 0.4: Suppose the savings rate is 0.2. At the steady state, what is capital per worker? What is output per worker? How much is saved per worker? Suppose the population growth rate is equal to the depreciationrate. Solve for n and d.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.
- Use a Solow Model diagram to show what will happen to the country's standard of living in a steady-state if this country has a permanent increase in the rate of immigration. (Use the words and graphics to analyze the change of a long-run level of output and capital) Please do fast ASAP fastSolo 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?when a country adds ideas what is it doing to its productivity and GDP? Which variable in the Solow Model equation is it changing?
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