2. Suppose an economy begins in steady state. By what proportion does per capita GDP change in the long run in response to each of the following changes? (a) The investment rate doubles (b) the depreciation rate falls by 10% (c) The productivity level rises by 10%

2. Suppose an economy begins in steady state. By what proportion does per capita GDP change in the long run in response to each of the following changes? (a) The investment rate doubles (b) the depreciation rate falls by 10% (c) The productivity level rises by 10%

Brief Principles of Macroeconomics (MindTap Course List)

8th Edition

ISBN:9781337091985

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter7: Production And Growth

Section: Chapter Questions

Problem 2PA

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Question

2. Suppose an economy begins in steady state. By what proportion does per capita GDP change in the long run
in response to each of the following changes?
(a) The investment rate doubles
(b) the depreciation rate falls by 10%
(c) The productivity level rises by 10%
(d) an earthquake destroys 75% of the capital stock
(e) A more generous immigration policy leads the population to double.

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