Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Question
Chapter 5, Problem 10E
(a)
To determine
Identify whether the growth rate of per capita
(b)
To determine
Identify whether the growth rate of per capita GDP when the productivity level increases by 10 percent.
(c)
To determine
The growth rate of per capita GDP when the earthquake destroys 75 percent of capital stock.
(d)
To determine
Identify whether the growth rate of per capita GDP due to immigration causes the population to double.
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Determine whether the following statement is True, False, or Uncertain, and explain your answer.
Statement: The Solow model suggests that economic growth is always and everywhere the result of sustained technological innovation
Consider an economy that begins in a steady-state. Then an asteroid destroys two third of the capital stock. Using Solow model, draw a graph to explain how the economy behaves over time. Draw another graph indicating how output progresses over time, and demonstrate what happens to the level and growth rate of per capita GDP. By how much does the output decline when the capital stock falls by two third?
Please include a description of what's happening on the graphs.
1. In the Solow model, if investment (I=sY) is lower than depreciation (dK), then….
A. Depreciation (dK) in the following period will be higher than in the current period.
B. Capital stock (K) in the following period will be lower than in the current period.
C. Per-capita GDP (y) in the following period will be the same as in the current period.
D. Overall GDP (Y) in the following period will be higher than in the current period.
The answer is B - - Can you show work for it, graph the representation for it
Chapter 5 Solutions
Macroeconomics (Fourth Edition)
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- Consider the Solow Model. Suppose a country enacts a tax policy that discourages investment, and the policy reduces the investment rate immediately and permanently from sbar to sbarprime . Assuming the economy (and hence the initial capital stock) is ABOVE its initial steady state (note: this is different from the standard case where we start at the intial steady state), use the Solow diagram to explain what happens to the economy over time and in the long run. Draw a graph showing how output evolves over time (put Y_t on the vertical axis with a ratio scale and time on the horizontal axis), and explain what happens to economic growth over time.arrow_forwardDraw a well labeled graph that illustrates the steady state of the solow model with population growth. Use the graph to find what happens to steady state capital per worker and income per worker in response to each of the following exogenous changes D. A one time permanent improvement in technology increases the amount of output that can be produced from any given amount of capital and labor. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.arrow_forwardThe amount of education the typical person receives varies substantially among countries. Suppose you were to compare a country with a highly educated labor force and a country with a less educated labor force.Assume that education affects only the level of the efficiency of labor. Also assume that the countries are otherwise the same: they have the same saving rate, the same depreciation rate, the same population growth rate, and the same rate of technological progress. Both countries are described by the Solow model and are in their steady states. What would you predict for the following variables?a. The rate of growth of total income.b. The level of income per worker.c. The real rental price of capital.arrow_forward
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