Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
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Question
Chapter 5, Problem 3RQ
To determine
The economic meaning of the vertical gap between the investment curve and depreciation curve.
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Students have asked these similar questions
What is the economic meaning of the vertical gap between the investmentcurve and the depreciation curve in the Solow diagram?
Let the production function be
Q = K0.®L0.2
Solow's assumptions are
K = sQ – 6K
The symbols s represents a (constant) marginal propensity to save, n, a (constant) rate of growth
of labor and 8 constant depreciation rate.
(a) Derive the fundamental equation of Solow growth model for given production function.
(b) Sketch graph of with k on the vertical axis and k on the horizontal take
n = 0.01, s = 0.3, 8 = 0.1.
Consider a basic Solow-Swan model. Suppose the aggregate production function is Y - AKL
and that A=1, the depreciation rate is = 0.06 and the saving rate is s = 0.12. In steady state,
d
which of the following is TRUE?
O Output per worker is 2.00 and consumption per worker is 0.24
O Output per worker is 2.00 and consumption per worker is 1.76
O Output per worker is 1.68 and consumption per worker is 1.48
O Qutput per worker is 1.68 and consumption per worker is 1.12
Chapter 5 Solutions
Macroeconomics (Fourth Edition)
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