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2. Explain whether the following italicized statement is true or false. Assume that a war destroy...
If a war destroys a large portion of a country's capital stock but the saving rate...
If a war destroys a large portion of a country's capital stock but the saving rate is unchanged, the Solow model predicts that output will grow and that the new steady state will approach: O the same level of output per person as before. O a higher level of output per person than before. O a lower level of output per person than before. O the Golden Rule level of output per person. Exhibit: Steady-State Consumption II Sk* Sk* f**...
Section B (LONG QUESTIONS): Answer any THREE (3) of the following four ques tions. Each question...
Section B (LONG QUESTIONS): Answer any THREE (3) of the following four ques tions. Each question is worth 25 marks for a total of 75 marks. B1. Solow (neoclassical) growth model: Consider the Solow (neoclassical) growth model seen in class where y denotes output per worker, k physical capital per worker, and A total factor productivity. Suppose that at any point in time the production function in per-worker terms is represented by where f(k) is increasing in k and there...
page 3 3. a. Given that a country at steady state engages in a cross border war with its neighbour and suffers significant infrastructure damage, illustrate and explain what will happen to the cou...
page 3 3. a. Given that a country at steady state engages in a cross border war with its neighbour and suffers significant infrastructure damage, illustrate and explain what will happen to the country's capital stock and output per worker if it maintains its 5 marks saving rate post-war. b. Given the scenario above, illustrate and explain what will happen to the country's capital stock and output per worker if it increases its saving rate after 10 years. 5 marks...
Link w DOC d. 16. nase 29. According to the Solow-Swan theory of long-run economic growth,...
Link w DOC d. 16. nase 29. According to the Solow-Swan theory of long-run economic growth, higher rates of saving for, equivalently, investment) lead to a higher income per person and higher consumption per person b. higher income per person and lower consumption per person c. higher income per person but not necessarily higher consumption per person d. higher consumption per person if the saving rate rises from an already high level and lower consumption per person if the saving...
1. Let's review the setup of the Solow growth model with saving rate s, constant population...
1. Let's review the setup of the Solow growth model with saving rate s, constant population growth rate n, and constant technology growth rate g Kt+1(1-8)K Lt+ 1 = (1 + n) Et+1-(1+g)E a) b) c) What is the steady-state capital and output per effective worker? (5pts) Solve for the golden rule level of capital. What is the saving rate then? (5pts) Many health experts have argued that malnutrition leads to reduced work capacity. Suppose in the Solow model, this...
1. Let's review the setup of the Solow growth model with saving rate s, constant population...
1. Let's review the setup of the Solow growth model with saving rate s, constant population growth rate n, and constant technology growth rate g Kt+1(1-8)K Lt+ 1 = (1 + n) Et+1-(1+g)E a) b) c) What is the steady-state capital and output per effective worker? (5pts) Solve for the golden rule level of capital. What is the saving rate then? (5pts) Many health experts have argued that malnutrition leads to reduced work capacity. Suppose in the Solow model, this...
Assume a production function, Y = KαL1 – α.. Assume constant population growth (n). In the...
Assume a production function, Y = KαL1 – α.. Assume constant population growth (n). In the Solow model, the steady-state level of output per worker is a function of: productivity. population, the depreciation rate, and the saving rate. poverty, productivity, and the saving rate. poverty, productivity, and the depreciation rate. poverty and the steady-state level of capital stock. 35. In the Solow model, it is assumed that a(n) __________ fraction of capital depreciates regardless of the capital stock. a. increasing...
12. Assume two economies are identical in every way except that one has a higher population...
12. Assume two economies are identical in every way except that one has a higher population growth rate. According to the Solow growth model, in the steady state the country with the higher population growth rate will have a ______ level of output per person and ______ rate of growth of output per worker as/than the country with the lower population growth rate. A) lower; a lower B) higher; the same C) higher; a higher D) lower; the same
3)- Consider an economy with the production function: Y=4K0.6 No.4, in the framework of the Solow...
3)- Consider an economy with the production function: Y=4K0.6 No.4, in the framework of the Solow Model, with usual definitions. Suppose, the labor force is growing at 1% a year, depreciation rate is 4%, and saving rate is 20%. (Total 17 points) a)- Find the steady state equilibrium of per worker levels of capital, output, and consumption. (4) b)- Find the golden rule saving rate, and golden rule per worker levels of output, capital, and consumption. (4) c)- How much...
1. Assume that an economy described by a Solow model has a per-worker production function given...
1. Assume that an economy described by a Solow model has a per-worker production function given by y- k05, where y is output per worker and k is capital stock per worker (capital-labor ratio). Assume also that the depreciation rate δ is 5%. This economy has no technological progress and no population growth (n 0). Both capital and labor are paid for their marginal products and the economy has been in a steady state with capital stock per worker at...
If a war destroys a large portion of a country's capital stock but the saving rate is unchanged, the Solow model predicts that output will grow and that the new steady state will approach: O the same level of output per person as before. O a higher level of output per person than before. O a lower level of output per person than before. O the Golden Rule level of output per person. Exhibit: Steady-State Consumption II Sk* Sk* f**...
Section B (LONG QUESTIONS): Answer any THREE (3) of the following four ques tions. Each question is worth 25 marks for a total of 75 marks. B1. Solow (neoclassical) growth model: Consider the Solow (neoclassical) growth model seen in class where y denotes output per worker, k physical capital per worker, and A total factor productivity. Suppose that at any point in time the production function in per-worker terms is represented by where f(k) is increasing in k and there...
page 3 3. a. Given that a country at steady state engages in a cross border war with its neighbour and suffers significant infrastructure damage, illustrate and explain what will happen to the country's capital stock and output per worker if it maintains its 5 marks saving rate post-war. b. Given the scenario above, illustrate and explain what will happen to the country's capital stock and output per worker if it increases its saving rate after 10 years. 5 marks...
Link w DOC d. 16. nase 29. According to the Solow-Swan theory of long-run economic growth, higher rates of saving for, equivalently, investment) lead to a higher income per person and higher consumption per person b. higher income per person and lower consumption per person c. higher income per person but not necessarily higher consumption per person d. higher consumption per person if the saving rate rises from an already high level and lower consumption per person if the saving...
1. Let's review the setup of the Solow growth model with saving rate s, constant population growth rate n, and constant technology growth rate g Kt+1(1-8)K Lt+ 1 = (1 + n) Et+1-(1+g)E a) b) c) What is the steady-state capital and output per effective worker? (5pts) Solve for the golden rule level of capital. What is the saving rate then? (5pts) Many health experts have argued that malnutrition leads to reduced work capacity. Suppose in the Solow model, this...
1. Let's review the setup of the Solow growth model with saving rate s, constant population growth rate n, and constant technology growth rate g Kt+1(1-8)K Lt+ 1 = (1 + n) Et+1-(1+g)E a) b) c) What is the steady-state capital and output per effective worker? (5pts) Solve for the golden rule level of capital. What is the saving rate then? (5pts) Many health experts have argued that malnutrition leads to reduced work capacity. Suppose in the Solow model, this...
3)- Consider an economy with the production function: Y=4K0.6 No.4, in the framework of the Solow Model, with usual definitions. Suppose, the labor force is growing at 1% a year, depreciation rate is 4%, and saving rate is 20%. (Total 17 points) a)- Find the steady state equilibrium of per worker levels of capital, output, and consumption. (4) b)- Find the golden rule saving rate, and golden rule per worker levels of output, capital, and consumption. (4) c)- How much...
1. Assume that an economy described by a Solow model has a per-worker production function given by y- k05, where y is output per worker and k is capital stock per worker (capital-labor ratio). Assume also that the depreciation rate δ is 5%. This economy has no technological progress and no population growth (n 0). Both capital and labor are paid for their marginal products and the economy has been in a steady state with capital stock per worker at...
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