Exam 8: Economic Growth I: Capital Accumulation and Population Growth

In the Solow growth model, with a given production function, depreciation rate, saving rate, and no technological change, higher rates of population growth produce:

Exhibit: Capital-Labor Ratio and the Steady State In this graph, capital-labor ratio k₂ is not the steady-state capital-labor ratio because:

The Solow growth model with population growth but no technological progress can explain:

The consumption function in the Solow model assumes that society saves a:

With population growth at rate n but no technological change, the Golden Rule steady state may be achieved by equating the marginal product of capital (MPK):

Many policymakers are concerned that Americans do not save enough. Using the Solow growth model, with no technological change and no population growth, explain why: a. for a given production function and depreciati on rate, the saving rate determines the level of output per worker. b. a higher saving rate will not necessarily generate more consumpti on per worker. c. a higher saving rate will not produce a faster steady-state growth rate of output per worker.

In the Solow growth model of an economy with population growth but no technological change, if population grows at rate n, then capital grows at rate ______ and output grows at rate ______.

Define 'Golden Rule level of capital'. How is it denoted?

The economies of two countries, North and South, have the same production functions, depreciation rates, and saving rates. The economies of each country can be described by the Solow growth model. Population growth is faster in South than in North. a. In which country is the level of steady-state output per worker larger? Explain. b. In which country is the steady-state growth rate of output per worker larger? c. In which country is the growth rate of steady-state total output greater?

In the Solow growth model, if investment exceeds depreciation, the capital stock will ______ and output will ______ until the steady state is attained.

If, in a war condition, the capital stock falls rapidly, how can a country experience high growth? Give an example.

In the Solow growth model, the steady state level of output per worker would be higher if the _____ increased or the _____ decreased.

What does the Malthusian model predict about population growth and its impact? How does the Kremerian model contradict the Malthusian model?

If an economy moves from a steady state with positive population growth to a zero population growth rate, then in the new steady state, total output growth will be ______ and growth of output per person will be ______.

In the Solow growth model, with a given production function, depreciation rate, saving rate, and no technological change, lower rates of population growth produce:

In the Solow growth model of an economy with population growth but no technological change, if population grows at rate n, total output grows at rate ______ and output per worker grows at rate ______.

In the Solow growth model with population growth, but no technological progress, the steady-state amount of investment can be thought of as a break-even amount of investment because the quantity of investment just equals the amount of:

Assume two economies are identical in every way except that one has a higher saving rate. According to the Solow growth model, in the steady state the country with the higher saving rate will have ______ level of output per person and ______ rate of growth of output per worker as/than the country with the lower saving rate.

Suppose an economy is initially in a steady state with capital per worker exceeding the Golden Rule level. If the saving rate falls to a rate consistent with the Golden Rule, then in the transition to the new steady state, consumption per worker will:

If Y = K^0.3L^0.7, then the per-worker production function is: