(a) Explain what productivity measures.

11.The Harrod-Domar model of growth key ingredients are: a.The depreciation rate is endogenous to the level of per capita income. b.The capital-output ratio is decreasing in 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

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Question 1 (a) Explain what productivity measures. (b) List and describe 3 factors of labour productivity. (c) International data show a positive correlation between political stability and economic growth. (i) Through what mechanism could political stability lead to economic growth?   (ii) Through what mechanism could strong economic growth lead to political stability? Question 2 (a) Distinguish between a government deficit and trade deficit? (b) Would you rather live in a nation with a with a high per capita GDP and a low growth rate, or in a nation with a low per capita GDP and a high growth rate? (c) Briefly explain the quantity theory of money and how it is related to inflation. (d) Suppose A&K Sound System is considering building a record studio in Cayman Islands. (i) Assume that A&K Sound System needs borrow money on the bond market. Why would an increase in interest rates affect the decision whether to build the studio? (ii) If A&K Sound System has enough of its…

(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)

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?

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?

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