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The standard Solow growth model assumes:
(a) The depreciation rate is endogenously determined.
(b) The capital-output ratio is independent of the level of per capita income
in a country.
(c) The population growth rate is independent of the level of per capita
income in a country.
(d) All of the above.
Step by step
Solved in 3 steps
- In 1998, Brazil had a per capita GDP of about $4,500, compared to per capita GDP of about $28,000 in the US. (A) If per capita growth were to average 2% per year indefinitely in the US and 5% per year in Brazil, how many years would it take Brazil to catch up with the US? (B) Using the assumptions of the Cobb-Douglas production function, how fast would capital stock have to grow for per capita GDP to rise 5% per year? How does that compare with capital stock growth of 3% per year in the US (assume technology advances 1% per year in both countries)? (C) In mature industrialized societies, the capital/output ratio is approximately 3.0. If the average depreciation rate is 0.04, what would be the current saving and investment ratio in the US? What would it be in Brazil if per capita GDP rose 5% per year?When the savings rate is relatively high, this implies that the steady state level of capital per worker is relatively high and output per worker is relatively low. True FasleBetween 1960 and 2010 the annual growth rate was 3% in country A and 1% in country B. The two countries are in the process of convergence if: (a) in 1960 country A was poorer than country B (b) in 1960 country A was richer than country B (c) since 1960 the capital output ration has increased more in country A than in country B (d) the savings rate is higher in country A than country B (e) both (a) and (c)
- The Solow Growth Model is a model that is often used to explain the theoretical relationship between several factors that determine a country's economic growthcountry.(a) Explain what you know about the Solow Growth Model and what are the most important determinants of a country's long-term growth rate?(b) Within the framework of the Solow Growth Model, how does population growth affect a country's economic growth rate?(c) Still within the framework of the Solow Growth Model, how does technological progress affect a country's growth rate?In this problem, we distinguish between labor and population in the Solow growth model. A proportion of the population, a, between zero and one, works. The production function is now written as Y = A(K^1/3)[(aL)^2/3] (a) How does an increase in a from 0.3 to 0.6 change steady state GDP? (b) Does it change the steady-state capital? Explain. (c) Suppose a rises steadily over time. How do you think would affect the growth rate of GDP?(A) cite the relationship between education and population growth. In 3 sentences only. (B) As of January 1, 2022, the population of Philippines was estimated to be 112,321,991 people. Is this more of a boon or a bane for us? In what way?
- Discuss five (5) negative consequences of population growthQuestion 1 Over a 20 year period, a country's per capita GNP grows by 80%. Its average annual growth rate is closest to 1% 9% 3% 4%Based on World Bank data, Philippines real per capita GDP in 2019 was US$3,850. It needs to increase this to at least US$15,000 to attain a high-income country status. By how much should real per capita grown annually if it wants to achieve this status in year a) 2028; b) 2037; c) 2055?
- In an economy with population growth rate at gn, technology growth rate at gå and depreciation rate at 8. The change in capital per effective worker k is given by the equation: O sf(k)(8 + 9A + 9N)k Of(k) - (8 + 9N)k ○ f(k) - (8 + 9A + 9N)k f(k) + (8 + 9A +9N)k O sf (k) + (8 + 9A + 9N)k(a) Two countries, Country A and Country B, are described by the Solow growth model. Both countries are identical, except that the rate of labor-augmenting technological progress is higher in A than in B. i. In which country is the steady-state growth rate of output per effective worker higher? ii. Does the Solow growth model predict that the two economies will converge to the same steady state? p (b) Based on the Solow growth model with population growth and labor-augmenting technological progress, explain how each of the following policies would affect the steady-state level and steady-state growth rate of total output per person: i. an increase in the government's budget deficit poits) inis) ii. grants to support research and development (c) Consider a Solow model where the production function no longer exhibits diminishing returns to capital accumulation. Assume the production function is now Y = AK. What happens to the growth rate of per capita GDP over time? (6pints)Assume that the per-worker production function is yt = 2kt^(0.3). The saving, depreciation and population growth rates are estimated at 0.3, 0.05 and 0.02, respectively. (a) Calculate the capital-labour ratio steady state for this economy. (b) Calculate consumption per worker at the steady state.