Consider the steady state of the Solow model with population growth and technological progress. (a) Use a graph to show what happens to steady-state capital per effective worker and output per effective worker in response to a decrease in the depreciation rate (?). Explain your answer. (b) Use a graph to show what happens to steady-state capital per effective worker and output per effective worker in response to a decrease in the population growth rate (?). Explain your answer. (c) Briefly explain any differences between the growth rate of output per worker (?⁄?) in the steady state when comparing your answers to parts (a) and (b). Define the steady state.
Consider the steady state of the Solow model with population growth and technological progress. (a) Use a graph to show what happens to steady-state capital per effective worker and output per effective worker in response to a decrease in the depreciation rate (?). Explain your answer. (b) Use a graph to show what happens to steady-state capital per effective worker and output per effective worker in response to a decrease in the population growth rate (?). Explain your answer. (c) Briefly explain any differences between the growth rate of output per worker (?⁄?) in the steady state when comparing your answers to parts (a) and (b). Define the steady state.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Consider the steady state of the Solow model with population growth and technological progress.
- (a) Use a graph to show what happens to steady-state capital per effective worker and output per effective worker in response to a decrease in the
depreciation rate (?). Explain your answer. - (b) Use a graph to show what happens to steady-state capital per effective worker and output per effective worker in response to a decrease in the population growth rate (?). Explain your answer.
- (c) Briefly explain any differences between the growth rate of output per worker (?⁄?) in the steady state when comparing your answers to parts (a) and (b).
- Define the steady state.
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