Question

Assume your boss is an important policymaker/decision-maker, but might not understand the economics behind his/her decisions and policies. For each of the following, brief the decision-maker on what he/she needs to know about macroeconomics to make better decisions in the given situations. Use equations, graphs, and discussion.

Policy Topic: We live in a poor country. Are we doomed to always be poor?

Are some countries doomed to always be poor? Solow's model suggests that poor countries can achieve a certain level of GDP per capita, but then reach a "steady state." Explain how/why? And contrast this to the conclusions of the endogenous growth model's conclusions. Why are the conclusions different? Use math, graphs, and discussion to explain.

Answer 1