6. Consider the Solow model discussed in class. Consider a population growth rate increase from n to n'. Show graphically what happens to capital per worker (k) and output per worker (y).
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- 2b. “The Solow model shows that the higher the rate of population growth, the higher the steady-state levels of capital per worker and output per worker because more population means more worker so more output”. Do you agree with the statement? Graphically explainB. The rate of technological progress rises. 2. Describe how, if at all, each of the following developments affects the break-even and actual investment lines in our basic diagram for the Solow model: a. The rate of population growth falls. B. The rate of technological progress rises. C. The production function is Cobb-Douglas, F(K,AL) = K" (AL)1-" , and capital"s share, ", rises. D. Workers exert more effort, so that output per unit of effective labor for a given value of capital per unit of effective labor is higher than before.Sweden and Norway are two neighboring countries in Northern Europe with similar savings rates, population growth rates, technology growth rates, and depreciation rates. However, Norway differs from Sweden in that Norway has large deposits of oil all along its coast, which makes it very easy for Norway to produce large quantities of crude oil every year with relatively little capital and labor. a) Draw a Solow Growth diagram that compares Sweden and Norway. What is the main difference between the two countries in the diagram? b) According to the Solow Growth Model, which country would have a higher standard of living in the long run? Which country would have a higher growth rate of its standard of living in the long run? c) Suppose now that, in the long run, oil becomes obsolete and has no value because it is uneconomical relative to renewable energy sources like solar and wind power. What would this do to your Solow Growth diagram in part a? How would the standard of living in Norway…
- Explain the Solow Model when there is an improvement of technologyPart 1. Solow model with population and productivity growth Consider an economy with a Cobb-Douglass production function Y = A1-«KªN1-a Where TFP, A, grows at a rate of g per year and population grows at a rate of п per year. 1. Derive an expression for the production function per effective worker Yt f (k): in terms of the ratio of capital per effective worker k AtNtIn the Solow model, if investment per-worker initially exceeds saving per-worker, how isthe steady-state capital per worker reached? Draw a graph to support your answer
- (III) Consider a version of the Solow growth model without technological change covered in lecture with a rate of population growth of zero (i.e. n=0). Assume that the country has been at the BGP for many years and that suddenly at time t ̅ there is a onetime increase in its population. Show how the economy will adjust to a new BGP by working with the modified system (per capita/worker variables). Show how capital per worker adjusts to the new Steady State level and how its growth rate changes over time.Production 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 ..Draw a well labeled graph that illustrates the steady state of the solow model with population growth. Use the graph to find what happens to steady state capital per worker and income per worker in response to each of the following exogenous changes D. A one time permanent improvement in technology increases the amount of output that can be produced from any given amount of capital and labor. Note:- Do not provide handwritten solution. Maintain accuracy and quality in your answer. Take care of plagiarism. Answer completely. You will get up vote for sure.
- Consider the following Solow diagram, indicating two sep-arate savings rates, 0.2 and 0.4: Suppose the savings rate is 0.2. At the steady state, what is capital per worker? What is output per worker? How much is saved per worker? Suppose the population growth rate is equal to the depreciationrate. Solve for n and d.Consider the Solow model. Using suitable diagrams, compare the different dynamics for the levels and growth rates of capital per capita and output per capita following: (a) a new wave of immigration, (b) an increase in the saving rate, (c) a one-shot foreign investment which increase the size of the available stock of capital, (d) an important technological advance.Assume there is no population and technology grows at a constant rate of g. Graphically illustrate and explain the effects of a reduction in the saving rate on the Solow-Swan growth model and increase in technological growth. In your graph, clearly label all curves and equilibria. Explain what will happen to each of the following over time: capital per effective worker, output per effective worker, and consumption per effective worker.