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4.
The Solow growth model differs from the Harrod-Domar because:
a.
Assumes that
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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Solved in 2 steps
- 8.Consider the empirical evidence on the Solow growth model when the population growth rate, depreciation and savings rate is the same across countries and when technological progress has the same rate in all countries. a.The Solow growth model cannot be tested for a large set of countries because it requires knowledge of each country’s steady state. b.The Solow growth model is supported by unbiased data for a small sample of countries over a long period of time. c.The Solow growth model is supported because they catch up with technological investments d.The Solow growth model is not supported by a large sample of countries over a short period of time.6.The standard Solow growth model assumes: a.The depreciation rate is a choice. b.The capital-output ratio is increasing in the level of per capita income in a country. c.The capital-output ratio is decreasing in the level of per capita income in a country. d.All of the above.Population Growth and Technological Progress – End of Chapter Problem In the Solow model, how does a decrease in the rate of population growth n affect the steady-state value of each of the following variables? Increases Decreases Stays the same Answer Bank f. The growth of output per worker y c. Output per worker y d. The capital-output ratio k/y g. The growth rate of total output Y e. The marginal product of capital MPK b. Capital stock per worker k a. The savings rate s
- QUESTION 22 whereas in the Solow model In the Romer model, the balanced growth path is equal to OAG-A; the steady-state level of capital is zero OB.0; infinity ; the growth rate declines as economy approaches the steady state O D. the level of the number researchers in an economy; capital is scarce OE. g=lL: there is a steady state G H. K. V. M Control Alt 無要換 Alt(a) Two countries, Country A and Country B, are described by the Solow growth model. Bothcountries are identical, except that the rate of labor-augmenting technological progress ishigher in A than in B.i. In which country is the steady-state growth rate of output per effective worker higher?ii. Does the Solow growth model predict that the two economies will converge to the samesteady state? (b) Based on the Solow growth model with population growth and labor-augmenting technologicalprogress, explain how each of the following policies would affect the steady-state level andsteady-state growth rate of total output per person:i. an increase in the government’s budget deficit ii. grants to support research and development (c) Consider a Solow model where the production function no longer exhibits diminishing returnsto capital accumulation. Assume the production function is now Y = AK. What happens tothe growth rate of per capita GDP over time?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?
- 3. Consider the Solow growth model. a. Show the steady state capital in a plot representing capital vs output (per worker). Explain what steady state means and why we can conclude that the selected value is the steady state capital. b. In the same plot, show the value of consumption and investment at the steady state. c. Explain what is the golden rule saving rate and how we can obtain it with reference to the previous plot.In the Solow growth model without population growth and technological progress, how can the steady state of an economy be described? (i) Total capital stock and total output are growing steadily over time. (ii) The change in capital stock per worker is zero. (iii) The level of investment per capita is equal to the depreciation of capital per person. O a. (i), (ii), and (iii) O b. Only (ii) and (iii) O c. Only (i) and (ii) O d. Only (i) and (iii)Solve both 1.In the Solow growth model with population growth of 5 per cent and a labour augmenting technological progress of 3 per cent, the economy’s: Select one: a. number of workers grow at 5 per cent while the number of effective workers grow at 2 per cent. b. number of workers grow at 3 per cent while the number of effective workers grow at 8 per cent. c. number of workers grow at 5 per cent while the number of effective workers grow at 8 per cent. d. number of workers grow at 5 per cent while the number of effective workers grow at 3 per cent. 2. Schumpeter's “creative destruction” is an explanation of economic progress resulting from: Select one: a. new product producers driving incumbent producers out of business. b. breaking down barriers to trade and development. c. using up scarce natural resources to create new products. d. creating new methods to destroy the environment.
- Q.2An economy described by the Solow growth model has the following production function: y = Vk. a.Solve for the steady-state value of y as a function of s, n, g, and d b. A developed country has a saving rate of 28 percent and a population growth rate of 1 percent per year. A less developed country has a saving rate of 10 percent and a population growth rate of 4 percent per year. In both countries, g = 0.02 and d = 0.04. Find the steady-state value of y for each country. c. What policies might the less developed country pursue to raise its level of income?Please no written by hand and no emageAlter the Solow growth model so that the production technology is given by Y= zK, where Y is outputi, Kis capital, and z is total factor productivity. Thus, output is produced only with capital. Click the icon the view information about the initial model used here. a. Show that it is possible for income per person to grow indefinitely. Also show that an increase in the savings rate increases the growth rate in per capita income. In terms of s, z, d, and n, the growth rate of income per person is If the value of this expression is M then income per person will grow; this can continue indefinitely because b. An increase in the savings rate the growth rate in per capita income (assuming z>0). c. What are some differences between this model and the basic Solow growth model? (Select all that apply.) DA In this model, the marginal product of capital is increasing in capital. B. in this model, the marginal product of capital is constant in capital. O C. In this model, it is possible for total…