Differentiate between steady state stock of capital and golden rule level of capital

Capital Accumulation as a Source of Growth-Questions for Review Might a policymaker choose a steady state with more capital than in the Golden Rule steady state? Might a policymaker choose a steady state with less capital than in the Golden Rule steady state? The decision of the policymaker depends on the level of Golden Rule level of capital, then lowering it will lead to an increase in If it is above the level that produces the . If it is below the level that of present produces the Golden Rule level of capital, then the policymaker faces a tradeoff between and future generations.

Explain with a diagram how the Solow growth model would postulate that convergence between rich and poor countries should happen over time. What is the empirical evidence in support of this hypothesis? (Detailed answer of 700 words with a short intro)

Suppose you add a variable rate of population growth to a two-sector model of growth. Draw and properly label a graph on how the production function, investment requirement line, and saving line look like. Does the addition of the variable rate of population growth to this model help you explain anything that a simpler two-sector model with a fixed rate of growth, or a one sector model with variable population growth, cannot? Expound.