4. An increase in the labor force: Consider a onetime change in governme policy that immediately and permanently increases the level of the labor forc in an economy (such as a more generous immigration policy). In particula suppose it rises permanently from L to L'. Assuming the economy starts i its initial steady state, use the Solow model to explain what happens to th economy over time and in the long run. In particular, comment on what hap pens to the level and growth rate of per capita GDP.

4. An increase in the labor force: Consider a onetime change in governme policy that immediately and permanently increases the level of the labor forc in an economy (such as a more generous immigration policy). In particula suppose it rises permanently from L to L'. Assuming the economy starts i its initial steady state, use the Solow model to explain what happens to th economy over time and in the long run. In particular, comment on what hap pens to the level and growth rate of per capita GDP.

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

ChapterA: Working With Diagrams

Section: Chapter Questions

Problem 2QP

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