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- Suppose that the depreciation rate increases. In the Solow growth model, determine the effects of this on the quantity of capital per worker and on output per worker in the steady state. Explain the economic intuition behind your results.In a standard Solow growth model that is calibrated in per-worker terms, what happens to the level of output when the saving rate (“s”) rises? How does the increase in “s” impact long-term output growth? How does the level of consumption change initially when savings rates rise? What happens to consumption over time?In the Solow growth model with no population growth and no technological change, the output per worker increases when investment per worker is greater than depreciation of capital per worker. True False
- when a country adds capital what is it doing to its productivity and GDP? Which variable in the Solow Model equation is it changing?Q) Suppose that the depreciation rate increase. In the Solow growth model, determine the effects of this on the quantity of capital per worker (k) and on output per worker (y) in the steady state. Show with graphs Copy paste answer strictly prohibited . So explain it own words and correctly.In the Solow model, if investment per-worker initially exceeds saving per-worker, how isthe steady-state capital per worker reached? Draw a graph to support your answer
- Suppose a Solow economy is initially at its steady state k∗, and suddenly is hit by a decrease in the depreciation rate δ, from δ to δ1. This change does not alter any of the other exogenous parameters in the model Depict this situation in a graph What happens to steady state level of capital per capita in this situation? What happens to the level of capital per capita over time? Depict this in a graph and explain intuitively.In a Solow growth model with population growth but no technological change, show graphically that an increase in the rate of depreciation will reduce the steady-state value of capital per worker and output per worker. It is reasonable to expect that depreciation rates differ across countries? Why or why not? Please be specific.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?
- Derive the long-run growth rates of output and output per capita as functions of the parameters of the Solow model.analyze the usefulness of Solow model in understanding empirical evidence relating to economic growth in economies.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?
