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Consider an economy with population growth n, depreciation rate δ and technological progress g. With the...

Consider an economy with population growth n, depreciation rate δ
and technological progress g. With the aid of graphs, explain what
happens to the steady-state capital per effective worker and income
per effective worker in response to each the following:
(a) Local events causes a shift in consumer preferences, leading to a
decline in the saving rate
(b) Greater access to birth control leads to a reduction in the rate of
population growth

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Answer #1

(6th tgk 55(K) RK Decline in the saving rate will cause fall in pes capita availability of capital per worker Lucome. the and= f(K) Cothtgk (othitok - S.FK) ber capita Income k x fall in the population growth rate will shaft the breakeven line to rig

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