Let 0 be the saving rate, n the population growth rate and d the depreciation rate. Which of the following conditions is consistent with steady state in the Solow-Swan model? O Y = 0K O K = (n+ d)Y O OY /L = (n+ d)K/L O OK = (n+ d)Y
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- Consider the Solow growth model. Suppose that F(K, N) = zK^a N^1-a,where a = 0.3. Also, assume that capital depreciation rate is 10% (that is d = 0.1), savings rateis 25% (that is s = 0.25), populations growth rate is 2% (that is n = 0.02), and z = 2.• First, determine capital per worker, income per capita, and consumption per capita in thesteady state.• Second, assume that the savings rate has increased to 40% but the total factor productivitydecreases to 1. Discuss the effect of savings and productivity on the steady state level ofconsumption per worker. PLEASE SHOW ALL HAND WRITEN STEPS!!Consider a basic Solow–Swan model with constant labour force L and constant total factor productivity A. Suppose the saving rate is s = 0.2 and the depreciation rate is δ = 0.05. Suppose also that steady-state output is 100. Which of the following is true? Group of answer choices All of the other options Steady state capital per worker is 500 Steady state investment per worker is 20 The steady state capital/output ratio is 6Consider a Solow–Swan model with saving rate s = 0.4, labour force growth gL = 0.05, constant productivity A = 1, and depreciation? = 0.05. If output per worker is y = Y/L = 200 and capital per worker is k = K/L = 800, how would k evolve over time?Group of answer choices k is below its steady state and decreases towards the steady state k is above its steady state and decreases towards the steady statek is at its steady state and remains constant k is above its steady state and increases towards the steady state
- Consider a basic Solow–Swan model with constant labour force L and constant total factor productivity A. Suppose the saving rate is s = 0.2 and the depreciation rate is ? = 0.05. Suppose also that steady-state output is 100. Which of the following is true?Group of answer choices Steady state investment per worker is 20 The steady state capital/output ratio is 6 Steady state capital per worker is 500 All of the other optionsConsider a basic Solow–Swan model with constant labour force L and constant total factor productivity A. Suppose the saving rate is s = 0.3 and the depreciation rate is ?δ = 0.1. Suppose also that steady-state output is 100. Which of the following is true? Group of answer choices - None of the other options - The steady state capital/output ratio is 2 - Steady state investment per worker is 40 - Steady state capital per worker is 1000Solow Models When population growth and depreciation are non-zero, what is the Solow equation: a. Δk = sf(k) - (δ)k b. Δk = (δ+n)k - f(k) c. Δk = f(k) - (δ+n)k d. Δk = sf(k) - (δ+n)k Starting to the right of k*, as we move toward k*, Investment a. increases b. decreases c. stays the same.
- Consider the country of Solow, which is described by the Solow–Swan model. Let the saving rate θ =0.8; let the population growth rate n = 0.05; let the rate of depreciation d = 0.05. If per capita incomey = 100 and the per capita capital stock k = 1000, which of the following is true? a.Replacement investment is 100, saving is 80 and k will increase towards the steady state per capita capitalstock b.Replacement investment is 100, saving is 60 and k will decrease towards the steady state per capita capitalstock c.Replacement investment is 100, saving is 80 and k will decrease towards the steady state per capita capitalstock d.Replacement investment is 100, saving is 80 and k is at the steady state per capita capital stockConsider the country of Solow, which is described by the Solow–Swan growth model with constanttotal factor productivity. Let the saving rate θ = 0.75. Per capita output (y) is equal to 100 and the percapita capital stock (k) is 1000. For Solow to be in steady state: a.the depreciation rate is 0.025 and the population growth rate is 0.05 b.the depreciation rate is 0.25 and the population growth rate is 0.5 c.the sum of the depreciation rate and the population growth rate must be less than 0.075 d.the depreciation rate and population growth rate must sum to 0.75[TRUE or FALSE] Other things constant, a technological change (i.e., increased productivity) in the Solow model increases the steady state level of capital and output per worker. True False
- Suppose the economy of an island behaves as the Solow model (Y=AK1/2L1/2), version 1.0 (constant population). Suppose that the productivity parameter is A=90, the depreciation rate is d=1/10, the savings (investment) rate is s=0.10, and the labor force is equal to 2 million (and constant over time). 1-Due to climate change, from 2011 onward, every year the island is hit by hurricanes of increasing force that destroy capital. As a result, the depreciation rate doubles. What will be the new long-run (steady state) value for income per worker (Y/L)? Pick the closest value. Also label the new steady-state GDP as point C in the diagram. Between 75 and 85 None of the other options Between 4,500 and 5,200 Between 8,000 and 8,500 Between 44 and 49 2-In year 2021 investors recognize that the depreciation rate is higher than a decade earlier. They also recognize that the actual returns to their investments in physical capital over the previous decade have consistently fallen below their…Consider the Solow model with a production function Y(t) = A*K(t)^α*L(t)^(1-α), Where A is a fixed technological parameter. Explicitly solve for the steady-state value of the per capita capital stock and per capita income. How do these values change in response to a rise in (a) the technological parameter A, (b) the rate of saving s, (c) α , (d) δ, the depreciation rate, and (e) the population growth rate n?Consider the Solow model with a production function Y(t) = A*K(t)αL(t)1-α, Where A is a fixed technological parameter. Explicitly solve for the steady-state value of the per capita capital stock and per capita income. How do these values change in response to a rise in (a) the technological parameter A, (b) the rate of saving s, (c) α , (d) δ, the depreciation rate, and the population growth rate n?