Explain, using Solow’s (1956) model, (i) why the seeds of long-run output growth lie in investment,...

Explain, using Solow’s (1956) model, (i) why the seeds of long-run output growth lie in investment, which constitutes a part of the aggregate demand (AD), and (ii) how AD grows when the long-run output grows, so that the balance in the goods market is maintained? [Word Limit = 150]

How does Solow’s model help both (i) the life-cycle theory of Modigliani and (ii) the permanent income hypothesis of Friedman to solve the “consumption puzzle” identified by Kuznets? [Word Limit = 100.]

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Rahul Sunny answered 6 months ago

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