According to the Solow-Swan model of growth, government policies which are designed to increase the savings...

According to the Solow-Swan model of growth, government policies which are designed to increase the savings rate will have no effect on growth in the very long run and may, under certain circumstances, actually reduce aggregate consumption in the long run.

Please evaluate the statement as either TRUE,FALSE or UNCERTAIN. Please illustrate your answers with diagrams and/or algebra when appropriate.

Expert Solution

The given statement is True. According to Solow-Swan model of growth, government policies which are designed to increase the savings rate will have no effect on growth in the long run and may in the certain circumstances lead to reduction in aggregate consumption level.

Rahul Sunny answered 2 years ago

Question 13 a) Consider the country of Solow,which is described by the Solow-Swan growth model with...

Question 13 a) Consider the country of Solow,which is described by the Solow-Swan growth model with constant total factor productivity. Let the saving rate 0=0.75.Per capita output(y)is equal to 100 and the per capita capital stock(k)is 1000. For Solow to be in steady state: A. the depreciation rate and population growth rate must sum to 0.75 B. the depreciation rate is 0.025 and the population growth rate is 0.05 C. the depreciation rate is 0.25 and the population growth rate...

which of the following elements of Solow-Swan model did the Romer model endogenies? A. the growth...

which of the following elements of Solow-Swan model did the Romer model endogenies? A. the growth rate of labor force B. the growth rate fo labor efficiency C. The saving rate D. none of above is correct E. the depreciation rate

Use a Solow-Swan diagram to show the qualitative effects of this increase in savings rate upon...

Use a Solow-Swan diagram to show the qualitative effects of this increase in savings rate upon steady state output per worker and capital per worker. Briefly describe the intuition behind this result.

Which of the following is true about the Solow Growth Model? a. In the Solow Growth...

Which of the following is true about the Solow Growth Model? a. In the Solow Growth model consumption per person always rises as k rises b. At a steady state the economy keeps growing with aggregate K, Y, C for example all rising over time c. At steady state the following condition must always hold at k*: sy=(n+d)k d. When the economy is below steady-state level of capital-per-worker then savings per worker is higher than breakeven investment e. Golden rule...

14. In the Solow-Swan growth model of Chapter 8, the economy ends up in the long...

14. In the Solow-Swan growth model of Chapter 8, the economy ends up in the long run with a steady state level of capital per worker: A. only if it starts with capital per worker less than the steady-state level. B. only if it starts with capital per worker more than the steady-state level. C. only if it starts with capital per worker equal to the steady-state level. D. regardless of its starting level of capital per worker. 15. In...

Can you please explain the concept of the Solow-Swan model of economic growth in macroeconomics? Can...

Can you please explain the concept of the Solow-Swan model of economic growth in macroeconomics? Can you also explain the components of the graph that depicts the model.

Economic growth a. According to the Solow model of economic growth, what determines the growth rate of...

Economic growth a. According to the Solow model of economic growth, what determines the growth rate of real income per person in the very long run (steady state)? Explain. b. What public policies have been proposed to increase the rate of economic growth? Explain.

Q1. Explain the solow-swan model in detail with graph.

According to the Solow model of growth, growth, in the long run (the steady-state), determine only...

According to the Solow model of growth, growth, in the long run (the steady-state), determine only by growth in technology. However, in the Solow model, there is nothing about how technology determined. 1. What factors do you think might affect technology in the long run? 2. Justify your answer and explain the implications to the growth in the long run.

Consider an economy at the steady state according to the Solow Growth Model with a per...

Consider an economy at the steady state according to the Solow Growth Model with a per capita production function where n=0.04, d=0.08, and s=0.3. Suppose a change in the age profile of the population leads to a reduction of the savings rate to s=0.28. As a result, consumption initially falls and continues to decline until reaching the new steady state. consumption initially rises and continues to increase until reaching the new steady state. that is above the original. consumption initially rises...

Question