Please answer fast (III) Consider a version of the Solow growthmodel without technological changecovered inlecture with a rate of population growth ofzero (i.e. n=0). Assume that the country hasbeen atthe BGP for many years and that suddenlyat time t there is a onetime increase in itspopulation.Show how the economy will adjust to anew BGP by working with the modifiedsystem (percapita/worker variables). Show how capitalper worker adjusts to the new Steady Statelevel andhow its growth rate changes over time.

The growth pace of a worth (GDP, turnover, compensation, and so on) measures its change starting…

odel without technological change overed in cture with a rate of population growth ero (i.e. n=0). Assume that the country h een at ne BGP for many years and that sudder time t there is a onetime increase in it opulation. now how the economy will adjust to a ew BGP by working with the modified ustem (per uarinhlog) Chou

odel without technological change overed in cture with a rate of population growth ero (i.e. n=0). Assume that the country h een at ne BGP for many years and that sudder time t there is a onetime increase in it opulation. now how the economy will adjust to a ew BGP by working with the modified ustem (per uarinhlog) Chou

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Growth rates in the Solow model (II): Suppose an economy begins in steadystate and is characterized by the following parameter values: s = 0.2, d = 0.1,A = 1, L = 100. Apply your answer to exercise 9 to calculate the growth ofper capita GDP in the period immediately after each of the changes listedbelow. (Hint: Since the economy begins in steady state, its growth rate isinitially zero and Kt = K∗.)(a) Te investment rate doubles.(b) Te productivity level rises by 10%.(c) An earthquake destroys 75% of the capital stock.(d) A more generous immigration policy leads the population to double.
Consider the Solow growth model with concave production function as studied in class. Supposethe economy is initially in the picture below, and currently has the level of capital stock of K0. What wouldhappen to the dynamics of capital accumulations when depreciation rate increases? Graphically denote thedirection and the speed of change/accumulation/decumulation of the capital stock, then verbally explain whythey move like so.
In the Solow growth model:1. Write the expression for consumption per capita in the steady-state equilibrium, asa function of capital per capita.2. What is the golden rule quantity of capital per capita ? Specifically, tell me thedefinition of this concept, and then relate it to the equation for the equilibriumconsumption per capita whose expression answers question (1) above.23. How do we find the golden rule savings rate, once we know the golden rule quantityof capital per capita?
Consider the Solow Model with no population or technological growth. Suppose that two countriesare identical except that in Country A the depreciation rate is greater than the depreciation rate inCountry B.a. How do you compare the steady state level of capital per worker in these countries? Illustrategraphically. Explain the economic intuition for the di erences in capital per worker in steadystate.b. Which country a higher output per worker in steady state? What about investment per workerin steady state? Explain carefully.
which statement \s are true. use graphs to exlain a. In the Solow growth model, the saving rate is a crucial determinant of the economy's long-run growth rate of output per worker. b. In the endogenous growth model , the representative firm sets the wage so that the demand and supply of efficiency units of labour are equal. c. In the endogenous growth model , there is no steady state of the economy as human capital will always continue to grow forever. d. The assumption of Constant Returns to Scale technology implies that the marginal product of factor imput is always decreasing.
(a) Two countries, Country A and Country B, are described by the Solow growth model. Bothcountries are identical, except that the rate of labor-augmenting technological progress ishigher in A than in B.i. In which country is the steady-state growth rate of output per effective worker higher?ii. Does the Solow growth model predict that the two economies will converge to the samesteady state? (b) Based on the Solow growth model with population growth and labor-augmenting technologicalprogress, explain how each of the following policies would affect the steady-state level andsteady-state growth rate of total output per person:i. an increase in the government’s budget deficit ii. grants to support research and development (c) Consider a Solow model where the production function no longer exhibits diminishing returnsto capital accumulation. Assume the production function is now Y = AK. What happens tothe growth rate of per capita GDP over time?
An increase in the labor force: Consider a onetime change in governmentpolicy that immediately and permanently increases the level of the labor forcein an economy (such as a more generous immigration policy). In particular,suppose it rises permanently from L to Lr. Assuming the economy starts inits initial steady state, use the Solow model to explain what happens to the economy over time and in the long run. In particular, comment on what hap-pens to the level and growth rate of per capita GDP.
Question 2 If a natural disaster destroys a large portion of a country's capital stock but the saving and depreciation rates are unchanged, the Solow model predicts that the economy will grow and eventually reach:a. A lower steady-state level of output than it would have before the disasterb. None of these answers is correctC. The same steady-state level of output as it would have before the disasterd. A higher steady-state level of output than it would have before the disaster e. Not enough information is given now suppose you are given the data for Brazil and Portugal. In Brazil, the saving rate is 0.1 and the depreciation rate is 0.1, while in Portugal saving rate is 0.2 and the depreciation rate is 0.1. Using the Solow model, you conclude that in the steady-state: a. Brazil has a higher capital-output ratio than Portugal b. Portugal has a higher capital-output ratio than Brazil c. Brazil has a higher level of output than Portugal d. Portugal has a higher level of output than…
In the Solow economic model, id like to know the relationship between the rate of population growth and the steady state level of income. I know that when the rate of population growth grow, then the breakeven investment line goes up, which decreses investment and capital per worker, but what does it do to the income level and the steady state rate of growth?
In Solow model, we assumed that population growth rate is irrelevant to saving rate and technological progress. In this question, we will relax this assumption. Assume that population growth would reduce technological progress, what would happen to the steady state level of capital per capita? What if otherwise population growth increases technological progress? Explain mathematically and graphically.
(III) Consider a version of the Solow growth model without technological change covered in lecture with a rate of population growth of zero (i.e. n=0). Assume that the country has been at the BGP for many years and that suddenly at time t ̅ there is a onetime increase in its population. Show how the economy will adjust to a new BGP by working with the modified system (per capita/worker variables). Show how capital per worker adjusts to the new Steady State level and how its growth rate changes over time.
The Solow Growth Model is a model that is often used to explain the theoretical relationship between several factors that determine a country's economic growthcountry.(a) Explain what you know about the Solow Growth Model and what are the most important determinants of a country's long-term growth rate?(b) Within the framework of the Solow Growth Model, how does population growth affect a country's economic growth rate?(c) Still within the framework of the Solow Growth Model, how does technological progress affect a country's growth rate?