Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Question
Chapter 9, Problem 1QR
To determine
The factor which determines the steady state rate of growth of income per worker.
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According to the Solow–Swan model, if the saving rate rises, then:
a. steady state per capita income falls
b. per capita income falls
c. steady state per capita income rises
d. steady state per capita income is unaffected
What are the characteristics of a steady state in the Solow growth model?
How does the Solow growth model explain economic growth?
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- 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?arrow_forwardwhen a country adds capital what is it doing to its productivity and GDP? Which variable in the Solow Model equation is it changing?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_forward
- Suppose the Solow model describes an economy. The population grows at a 0.5% rate, and its labour efficiency grows at a 1% rate. Thus, in the steady state, capital per worker grows at a ____ rate. a. 1.5% b. 0% c. 0.5% d. 1%arrow_forwardIn the general Solow model there is no (zero) growth in GDP per worker in steady state. True or Falsearrow_forwardUse the Solow model to comment on how a wealth tax will likely affect the growth rate of the capital stock. How will this policy affect the growth rate of output per worker? How will this policy affect the wage rate for workers?arrow_forward
- According to the Solow Growth Model, each of the following leads to higher level of output and capital in the long run: an increase in the saving rate, an increase in the depreciation rate, and an in increase productivity. A.) True B.) Falsearrow_forwardWhat is the Solow growth model?arrow_forwardIn the Solow–Swan model, a decrease in the rate of population growth will have what effect on the steady-state level of real GDP per capita? a. Increase b. No change in real GDP per capita because although it does change the rate at which output and population are growing, it will make both growth rates change by the same amount and so the output-population ratio will be unchanged c. Decrease d. No change in real GDP per capita because although it does change the level of labour, the level of capital will change to keep the capital-labour ratio the same as beforearrow_forward
- Countries A and B have the same rates of invest- ment, population growth, and depreciation. They also have the same levels of income per capita. Country A has a higher rate of growth than does Country B. According to the Solow model, which country has higher investment in human capital? Explain your answer.arrow_forwardIncome per person exceeds $ 25,000 in many countries but it is below $ 1,000 per person in many other countries. Based on the Solow growth model, suggest at least four possible explanations for this gap in living standards.arrow_forwardConsider the Solow growth model seen in lectures. Use n to denote population growth. Which of the following is true in steady state? a. ΔK/K= ΔY/Y= 0 ; Δk/k= Δy/y= 0 b. ΔK/K= ΔY/Y= 0 ; Δk/k= Δy/y= n c. ΔK/K= ΔY/Y= n ; Δk/k= Δy/y= 0 d. ΔK/K= ΔY/Y= n ; Δk/k= Δy/y= n e. None of the abovearrow_forward
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