Is the following statement true, false, or uncertain? According to the Solow growth model, an increase in the saving rate should lead to a decline in consumption per person in the long run.
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- Which of the following is an incorrect statement about the variable ‘s’ in the Solow Growth Model? a.s is the fraction of income that is saved b.s is an exogenous factor c.s is referred to as saving per worker d.s determines how income is allocated between consumption and investmentWhat can the Solow model tell us about growth in the short term and in the long term? What is different between the Solow model and the endogenous growth model?What are Critisms or the drawbacks of the Solow Growth Model? What types of economical growth that it does not account for?
- Consider the following numerical examples for the Solow Growth Model: Economy A z=1 s=0.5 F(K,N)=K0.3N0.7 n=0.01 d=0.1 Economy B z=1 s=0.2 F(K,N)=K0.3N0.7 n=0.01 d=0.1 In which economy is Consumption per capita higher in steady state? O Economy A O Economy B Not enough InformationConsider the following numerical examples for the Solow Growth Model: Economy A z=1 s=0.5 F(K,N)=K0.3N0.7 n=0.01 d=0.1 Economy B z=1 s=0.2 F(K,N)=K0.3N0.7 n=0.01 d=0.1 In which economy is GDP per capita higher in steady state? O Economy A O Economy B O Not enough InformationIn a standard Solow growth model that is calibrated in per-worker terms, what happens to the level of output when the saving rate (“s”) rises? How does the increase in “s” impact long-term output growth? How does the level of consumption change initially when savings rates rise? What happens to consumption over time?
- when a country adds capital what is it doing to its productivity and GDP? Which variable in the Solow Model equation is it changing?Derive the long-run growth rates of output and output per capita as functions of the parameters of the Solow model.Graphically illustrate and explain the effects of an increase in the rate of technology on the Solow growth model. In your answer, you must clearly label all curves and the initial and final equilibria. In your answer, explain what happens to the rate of growth of output per worker and the rate of growth of output as the economy adjusts to this increase in the growth of technology.
- According to the Solow Growth Model, each of the following leads to higher level of output and capital in the long run: an increase in the saving rate, an increase in the depreciation rate, and an in increase productivity. A.) True B.) FalseProduction 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 ..Consider the Solow growth model seen in lectures. Use n to denote population growth. Which of the following is true in steady state? a. ΔK/K= ΔY/Y= 0 ; Δk/k= Δy/y= 0 b. ΔK/K= ΔY/Y= 0 ; Δk/k= Δy/y= n c. ΔK/K= ΔY/Y= n ; Δk/k= Δy/y= 0 d. ΔK/K= ΔY/Y= n ; Δk/k= Δy/y= n e. None of the above
