Question

Provide a brief overview of the Solow model. Discuss assumptions on returns to scale and outcomes....

  1. Provide a brief overview of the Solow model.

  • Discuss assumptions on returns to scale and outcomes. Particularly what are the main long run conclusions.

Business   Economics   
0 0
Add a commentTranscribed image text
Next >

Homework Answers

Answer #1

Solow model of growth tells us that there can be a steady growth in the long run. If we introduce various factors that effect economic growth than are risk of low productivity can be reduced. Assumption:-

  1. One commodity is produced.

  2. Output is regarded as net output.

  3. Constant return to scale.

  4. Price and wages are flexible.

  5. There is perpetual full employment of labour.

  6. Labour and capital are substitutable for each other.

  7. The saving ratio is constant.

0 0
Know the answer?
Your Answer:

Post as a guest

Your Name:

What's your source?

Earn Coins

Coins can be redeemed for fabulous gifts.

Log In

Sign Up

Not the answer you're looking for?
Ask your own homework help question
Similar Questions
what are the main conclusions of the solow growth model, explain steady state as part of...
what are the main conclusions of the solow growth model, explain steady state as part of your answer?
Provide an overview of the merger process. Discuss how targets are identified, how acquiring companies can...
Provide an overview of the merger process. Discuss how targets are identified, how acquiring companies can acquire the shares of a target company(particularly if it is a hostile bid) and how merger transactions can be financed.
Solow Growth Model Question: Consider an economy where output (Y) is produced according to function Y=F(K,L)....
Solow Growth Model Question: Consider an economy where output (Y) is produced according to function Y=F(K,L). L is number of workers and Y is the capital stock. Production function F(K,L) has constant returns to scale and diminishing marginal returns to capital and labor individually. Economy works under assumption that technology is constant over time. The economy is in the steady-state capital per worker. Draw graph. Next scenario is that the rate of depreciation of capital increases due to climate change...
According to the Solow growth model, what are the two general ways a country can grow...
According to the Solow growth model, what are the two general ways a country can grow in the long run? Use graphs to demonstrate each
What is the difference between diminishing returns and decreasing returns to scale? What kind of returns...
What is the difference between diminishing returns and decreasing returns to scale? What kind of returns to scale are possible or observed in your organization? Why? An expanding company is a sign of increasing returns to scale while a company that is downsizing is usually experiencing decreasing returns to scale.Is your clothing firm expanding or downsizing? Can you assess the shape of the long-run average cost curve for your organization? you do not need to estimate the cost function, merely...
According to the Solow growth model, what are the two general ways a country can grow...
According to the Solow growth model, what are the two general ways a country can grow in the long run? Explain each in complete detail, and use graphs to demonstrate each.
Suppose, in the Solow growth model, that learning by doing is captured as a cost of...
Suppose, in the Solow growth model, that learning by doing is captured as a cost of installing new capital. In particular, suppose that for each unit of investment, r units of goods are used up as a cost to firms. (a) Determine how r affects the steady state quantity of capita per worker, and per capita income. (b) Now suppose that r differs across countries. How will these countries differ in the long run? Discuss.
Problem 2 a. The predictions of the Solow growth model lead us to be optimistic about...
Problem 2 a. The predictions of the Solow growth model lead us to be optimistic about the prospects of poorer countries to reaching the standard of living of richer countries in the very long run. What element in the Solow model of growth drives this result? Is this result confirmed in the data? b. A given rate of growth may be driven by a high rate of capital accumulation and/or a high rate of technological progress. Does the source of...
What are increasing, constant, and decreasing returns to scale? How are they related to the shape...
What are increasing, constant, and decreasing returns to scale? How are they related to the shape of the long-run average cost curve?
Consider the Solow Model with the following production function for output Y=AK1/2 L1/2   Being at the...
Consider the Solow Model with the following production function for output Y=AK1/2 L1/2   Being at the steady state suppose that climate changes and the global warming reduce the life of physical capital by 20% i. While in country 0 no counter interventions are implemented, in country 1 the governmetn wants to avoid any short run fluctuation in output and consumption. Which policies could the government implement? Explain ii. Describe what will happen in the two countries in the short run...
ADVERTISEMENT
Need Online Homework Help?

Get Answers For Free
Most questions answered within 1 hours.

Ask a Question
ADVERTISEMENT