In the endogenous growth model, a) the growth rate of human capital is equal to the growth rate of output. b) the growth rate of output is greater than to the growth rate of human capital. c) None of the answers are correct d) the growth rate of capital is less than the growth rate of output. e) the growth rate of human capital is greater than the growth rate of output.
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- You were discussing the growth models with your friend Gaston during spring break. He summarized that the basic difference between the Solow model and the Romer model is that the Solow model suffers from diminishing returns-each additional unit of capital has less benefit than the previous unit. The Romer model doesn't have the same problem as labor used to generate new ideas doesn't have diminishing returns. He hypothesizes that if you changed the law of motion to At+1 = At + zol1/2A; that now the Romer model has diminishing returns to labor and will reach a steady state where growth is zero. Is he right?There exist several drawbacks in the Solow growth model (Solow, 1956) that does not make the model provide satisfying answers to the central questions about economic growth. Explain the key problems with the Solow growth model that led to the emergence of the endogenous growth models (e.g., productive externalities and R&D models of endogenous growth)Based on article "Technology and economic growth: From Robert Solow to Paul Romer" by Rui Zhao, Solow mentioned technology (At) and capital per unit of effective labor (Kt) have a significant influence on a country's ability to “catch-up” or “converge” to a steady-state level (K*). Using the central equation of the Solow model, discuss the influence of At and Kt on country's ability to grow and move to a steady-state level (K*).
- Below, there are examples of policies which can facilitate economic growth within an economy. For a), b) and c) state how these examples can facilitate economic growth within the economy. a) Examples of distributive policies are public expenditure on welfare, expenditure on health and education and expenditure of public safety. b) Examples of the re-distributive policies are temporary income support, food distribution program and nutrition aid programs etc. c) Examples of the regulatory and substantive policies are regulation of pollution policy, curbing carbon emission, encouraging groundwater reserves etc.Use the Solow model with exogenous growth to answer the following.Q 3.1: Following a reduction in the population growth rate, output per worker growth permanently increases. True or False Q 3.2: Following a reduction in the population growth rate, output per worker growth permanently increases. True or False Q 3.3: The only way to increase the long-run growth rate of output per worker is to increase the growth rate of labor efficiency. True or False Q 3.4: Following a decrease in TFP, output per worker growth temporarily declines. True or FalseThe economic growth model(s) of ( ) below can be recognized as an endogenous model. A Slow-Swan model; B Ricardo’s model; C Romer-Lucas model; D Harrod-Domar model; E Aghiot-Howitt model.
- Q.2 An economy described by the Solow growth model has the following production function: y=√k a)A developed country has a saving rate of 28 percent and a population growth rate of 1 percent per year. A less developed country has a saving rate of 10 percent and a population growth rate of 4 percent per year. Inboth countries, g = 0.02 and d = 0.04. Find the steady-state value of y for each country. b)What policies might the less developed country pursue to raise its level of income?Which of the following statements is accurate: New growth theory suggests that human capital is irrelevant for economic growth. New growth theory suggests that economic growth is unsustainable because of population growth. New growth theory suggests that restraining population growth is important for economic growth. New growth theory suggests that economic growth can be sustained through the discovery of new technologies.Is it possible to have economic growth with no opportunity cost? A)Yes, economic growth requires no current sacrifices-only the passage of time. B) No, but economic growth is always worth whatever sacrifice is required. C) No, because growth depletes the stock of knowledge so that more growth today means less growth tomorrow D) No, because growth requires the sacrifice of consumption goods in order to invest in such things as capital tormation and research and development.
- Economic growth accounting studies show that Group of answer choices Improvements in physical capital are more important than improvements in human capital Technology is the most important component of economic growth Capital deepening is the most important factor in economic growth. Population growth is the most important source of growth28) Empirical evidence from 1960 to 2010 shows that convergence in economic growth is occurring in which of the following cases? A) Low-income industrial countries are catching up to high-income industrial countries. B) Low-income developing countries are catching up to high-income industrial countries. C) Low-income industrial countries are catching up to high-income developing countries. D) All low-income countries are catching up to all high-income countries. 29) Which of the following countries actually experienced negative economic growth from 1960 to 2010? A) Israel B) Singapore C) Niger D) Malaysia 30) Which of the following accurately describes the impact of the rule of law on a country's economic growth rate? A) Countries with a strong rule of law have faster economic growth. B) Countries with a weak rule of law have faster economic growth. C) Countries that enforce property rights through lawsuits have slower economic growth. D)…Which of the following countries would be more likely to experience strong economic growth, other things equal? Group of answer choices Country JKL’s government has the right to take away property from individuals to distribute to government officials as they are better suited to have successful businesses. Country ABC has an extensive set of business laws and property rights laws which promote trust in economic activity. Country DEF has common property laws and economic activity is regulated by a national council. Country GHI enforces private property rights only for some groups in society.