Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Question
Chapter 8, Problem 2QQ
To determine
The Solow growth model.
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Check out a sample textbook solutionStudents have asked these similar questions
The government of "Arcadia" is considering
various proposals to increase the country's
GDP growth rates. Using the predictions of
the Solow growth model, please discuss the
merits of each of the proposed ideas for
generating growth in income. For each
proposal does your answer change in the
short and long run? That is, would you always
give the same advice?
a. Information campaign to encourage people
to save in an effort to increase national
savings rate.
o. Investment in building new roads connecting
villages to cities (in this case existing road
infrastructure is limited in the country)
Problem 1:
How can policymakers influence a nation’s saving rate?
Problem 2:
Draw a well-labeled graph that illustrates the steady state of the Solow model with population growth. Use the graph to find what happens to steady-state capital per worker and income per worker in response to each of the following exogenous changes.
a. A change in consumer preferences increases the saving rate.
b. A change in weather patterns increases the depreciation rate.
c. Better birth-control methods reduce the rate of population growth.
d. A one-time, permanent improvement in technology increases the amount of output that can be produced from any given amount of capital and labor.
1. Draw a well-labeled graph that illustrates the steady-state of the Solow model with population growth. Use the graph to find what happens to steady-state capital per worker and income per worker in response to each of the following exogenous changes.a. A change in consumer preferences increases the saving rate.b. A change in weather patterns increases the depreciation rate.c. Better birth-control methods reduce the rate of population growth.
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- What are the implication of economic growth that relate with Solow growth and Endogenous growth?arrow_forwardEconomics 4. The Solow model says that population growth will not benefit a country in the long run but Michael Kremer disagrees. Explain both positions. Use a graph to explain Solow's argument. 5. The amount of education the typical person receives varies substantially among countries. Suppose you were to compare a country with a highly educated labor force and a country with a less educated labor force. Assume that education affects only the level of the efficiency of labor. Also assume that the countries are otherwise the same: They have the same saving rate, the same depreciation rate, the same population growth rate, and the same rate of technological progress. Both countries are described by the Solow model and are in their steady states. How would the following variables differ between the countries? A. The rate of growth of total income B. The level of income per worker C. The real rental price of capital D. The real wagearrow_forwardChapter 8: Economic growth I: Capital Accumulation and Population Growth Question: In the Solow growth model, the steady state level of output per worker would be greater if the .. .. rate rose or the ....... rate declined. ..... ..... Lütfen birini seçin: O a. depreciation / population growth b. population growth /saving saving; depreciation d. population growth/ depreciation population growth / savingarrow_forward
- T/F/U. The Solow Model says that economic growth is a function of two things: capital and ideas.arrow_forwardThe Solow growth model accounts for ... A. why richer countries have higher savings rates. B. the patterns of international trade among countries. C. why people consume too much. D. business cycles. E. the level of research and development spending in an economy.arrow_forwardUse the Solow model to trace through the effect of these two scenarios on short and long-term growth rates in an economy. (i) A rise in the savings rate. (ii) A natural disaster hits a country and destroys half the country’s capital stock.arrow_forward
- Explain to me how solow growth and endogenous growth have relation to the standard of living of a country?arrow_forwardWhen was the Solow growth model developed and what was significant about that period? What did it predict that was significant at the time?arrow_forwardHow does the Solow growth model explain economic growth?arrow_forward
- Beyond the Solow model, how do endogenous growth theories provide greater understanding of the process of economic growth?arrow_forwardProduction function is given by Y= (1/2)K^a(AN)^(1-a), where a=2/3. The rate of depreciation of capital is equal to 15 percent, the rate of technological progress is equal to 3 percent, and the rate of population growth is equal to 2 percent. The economy was in the steady state at time tand the level of technology was equal to A=80. Use the Solow growth model to answer the following questions. 1. If the saving rate s=80 percent, the steady state level of output per unit of effective labor at time tis equal to ... 2. If the saving rate s=80 percent, the steady state level of consumption per unit of effective labor at time tis equal to ... 3. If the saving rate s=80 percent, the steady state level of consumption per worker at time tis equal to ..arrow_forwardAssume that an economy is described by the Solow model in the long run. The rate of population growth in this economy is n technological growth is g rates of total GDP, GDP per worker, and GDP per effective worker? 0.01 and the rate of 0.02. What are the long-run (steady state) growth rates of total GDP, GDP per worker, and GDP per effective worker?arrow_forward
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