Question

1. What is Solow Growth Rate? What is Okun’s Law

Answer 1

Solution:-

(1) Solow growth Rate:- The Solow Growth rate is the economic growth rate that analyzes changes in the level of output in an economy over time when changes in the population growth rate and savings rate and the rate of progress and productivity. its predicts that the rate of growth is independent of the rate of unemployment, since it includes no unemployment.

For example= if population growth constant increase year by year then it's changes the level of output and growth of economy.

(2) Okuns law:- Okuna Law is the Law which measures the Relationship between country's Unemployment and it's production losses. that means okuns law predicted the negative relationship between change in unemployment rate and changes in output. for example if in the country only 1% increase in unemployment then it's reduce additional 2% GDP of country and vice- versa.