Question

As an economy adjusts to a decrease in the saving rate, according to Solow model, we would expect output per worker

-none of the other answers is correct.

-to decrease at a permanently higher rate.

-to return to its original level.

-to increase at a permanently higher rate.

-to decrease at a constant rate and continue decreasing at that rate in the steady state.

Answer #1

13. Suppose there is an increase in government spending in a
closed economy. In medium-run such a fiscal policy will cause:
none of the other answers is correct.
ambiguous effects on the neutral real interest rate
the nominal wage to rise
no change in the neutral real interest rate
the neutral real interest rate to rise
14. Suppose the economy is initially in the steady state.
According to Solow model without technological progress, an
increase in the depreciation rate (δ)...

2. The Solow-Swan Model
a) Consider an economy that is initially in a steady state
equilibrium. Assume that in this equilibrium it has a saving rate
of 50 per cent and a depreciation rate of 2 per cent. Further
assume that the population is constant and that the level of output
produced can be represented by the following production function: Y
= AKαL 1−α where A = 1 and α = 0.5. Use the Solow-Swan model to
determine the level...

Question #1: The Basic Solow Model
Consider an economy in which the population grows at the rate of
1% per year. The per worker production function is y = k6, where y
is output per worker and k is capital per worker. The depreciation
rate of capital is 14% per year. Assume that households consume 90%
of their income and save the remaining 10% of their income.
(a) Calculate the following steady-state values of
(i) capital per worker
(ii) output...

Suppose there is a permanent increase in a country's saving
rate. This increase in the saving rate will cause:
Group of answer choices
a permanently higher level of capital per worker.
a permanently higher level of output per capita.
a permanently faster growth rate of output.
both of the first two answers above
none of the above.

In the Solow growth model of an economy with population growth
and technological progress, the steady-state growth rate in output
per worker is equal to:
(a) zero
(b) the rate of technological progress g.
(c) the growth rate of population n plus the rate of technological
progress g. (d) the rate of technological progress g minus the
growth rate of population n.
In the Solow growth model of an economy with population growth
and technological progress, the steady-state growth rate...

Answer the following questions using the basic Solow growth
model, without population growth or technological progress.
(a) Draw a diagram with per worker output, y, consumption, c,
saving, s and investment, i, on the vertical axis and capital per
worker, k, on the horizontal condition. On this diagram, clearly
indicate steady-state values for c, i, and y. Briefly outline the
condition that holds in the steady- state (i.e. what is the
relationship between investment and the depreciation of
capital?).
(b)...

QUESTION 1
Suppose an economy can be characterized by a Cobb-Douglas
production function with capital share of 1/3, and A =
200. The investment rate is 0.12 (12%), the annual rate of growth
of the labor force is 0.02 (2%), and the annual depreciation rate
of capital is 0.04 (4%). According to the Solow growth model, this
economy's steady state capital/labor ratio (capital per worker,
k) is
4,000
8,000
10,000
12,000
None of the above.
QUESTION 2
The steady state...

Decrease in saving rate in Solow model. Please explain with
graphs

1.
In Solow model without technological progress, a 5% increase in
capital stock K
will cause:
Group of answer choices
Y to increase by exactly 5%.
a decrease in K/N.
a decrease in Y/N.
no change in Y/N.
Y to increase by less than 5%.
2.
Assume that an economy experiences both positive population
growth and technological progress. Once the economy has achieved
balanced growth, according to Solow model with technological
progress, we know that the output per effective worker...

In the Solow growth model. if the saving rate increases, then
output per person ___________ and consumption per person
___________.
A. may increase or decrease; decreases.
B. increases; may increase or decrease.
C. increases; decreases.
D. decreases; may increase or decrease.

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