2. Now assume population growth is instead-0.5% approximately the growth rate when every couple has 1.7 children), but that all other parameters stay he same. a. What is the new steady-state output per worker? Is it higher or lower than with faster

2. Now assume population growth is instead-0.5% approximately the growth rate when every couple has 1.7 children), but that all other parameters stay he same. a. What is the new steady-state output per worker? Is it higher or lower than with faster

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter20: Economic Growth In The Global Economy

Section: Chapter Questions

Problem 5P

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Question

1. Using the solow growth model, given y(K) =
k^0.4, S=0.20, depreciation rate=0.04 and n=1%,
a. What is the steady-state level of capital per
worker?
b. What is the steady-state of output per worker?
c. What is the steady-state level of consumption
per worker?
2. Now assume population growth is instead-0.5%
(approximately the growth rate when every couple
has 1.7 children), but that all other parameters stay
the same.
a. What is the new steady-state output per
worker? Is it higher or lower than with faster
population growth? [A numerical answer and a 1
sentence response is fine.]
b. What is the new steady- state of consumption
per worker? Is it higher or lower than with faster
population growth? [A numerical answer and 1
sentence response is fine].

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