Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Question
Chapter 6, Problem 8RQ
To determine
Explanations of productivity growth by endogenous growth theory
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Beyond the Solow model, how do endogenous growth theories provide greater understanding of the process of economic growth?
Explain about the potential limitations of the Solow growth model and endogenous growth model that will affect the standard of living of a country.
What can the Solow model tell us about growth in the short term and in the long term? What is different between the Solow model and the endogenous growth model?
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- When was the Solow growth model developed and what was significant about that period? What did it predict that was significant at the time? When was the endogenous growth model developed? What did researchers observe in the world that led to its development? What is the main feature that differentiates the two?arrow_forwardWhat are the differences between the Solow model and endogenous growth theories?arrow_forwardHow does the Solow growth model explain economic growth?arrow_forward
- Evaluate the following statement. People do not save enough or invest enough in their education. What would be the arguments for and against government policies that encourage an increase in private savings and more investment in education? Using appropriate equations and graphs, consider the implications of both the Solow growth model and the endogenous growth model, but also their limitations, when addressing these questions.arrow_forwardThe Solow model without exogenous productivity growth predicts that rich countries with more capital will grow faster than poor countries with less capital, assuming other economic conditions are equal. Is this statement true or false? Explain.arrow_forwardCarefully explain the Solow Growth theory and its extended variations. That is, the basic Solow model and the model expanded to incorporate at least two other sources of economic growth.arrow_forward
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