Suppose saving per capita decreases in a country. Using the neoclassical growth model: A. Illustrate graphically...

Suppose saving per capita decreases in a country. Using the neoclassical growth model:

A. Illustrate graphically a decrease in the saving rate. Explain why this would slow growth in GDP per capita.

B. What would happen in the long-run to GDP per capita and to growth of GDP per capita?

Solutions

Expert Solution

Rahul Sunny answered 1 year ago

Next > < Previous

Related Solutions

Graphically illustrate the impact of the following events on real GDP per capita in a balanced-...

Graphically illustrate the impact of the following events on real GDP per capita in a balanced- growth-path equilibrium. Keep in mind that the Solow model graph provides qualitative predictions for variables such as real GDP per effective worker (y), and that real GDP per capita is given by Y/L = A × y. a) For the first time in modern history, the birthrate in Japan falls below the mortality rate. (5 points) b) A megathrust earthquake, much like the 2004...

Graphically illustrate the aggregate consumption and saving functions.

Graphically illustrate the aggregate consumption and saving functions. Explain these functions with at least 200 words. You may give examples.

Using Romer's growth/production model, derive the expressions for: the level of per capita output in time...

Using Romer's growth/production model, derive the expressions for: the level of per capita output in time t, as a function of the growth rate.

Graphically illustrate and explain the effects of an increase in the saving rate on the Solow...

Graphically illustrate and explain the effects of an increase in the saving rate on the Solow growth model. In your answer, you must clearly label all curves and the initial and final equilibria. In your answer, explain what happens to the rate of growth of output per worker and the rate of growth of output as the economy adjusts to this increase in the saving rate.

In the Solow model, a change in population growth rate affects the level of per capita...

In the Solow model, a change in population growth rate affects the level of per capita income, but it has no effect on the long-run growth rate of per capita income. true or false and why

Use the Solow growth model to answer the questions below. Suppose the population growth rate decreases...

Use the Solow growth model to answer the questions below. Suppose the population growth rate decreases in a permanent manner. a. Explain the impact on capital per worker. b. Explain the impact on output per worker. c. Explain the impact on consumption per worker

4) Using the liquidity preference model, graphically illustrate: a) an initial increase in the money supply...

4) Using the liquidity preference model, graphically illustrate: a) an initial increase in the money supply b) a longer-term increase in income (GDP) and the price level (inflation).

a) Using the AS-AD model, graphically illustrate and describe in words what happens to the long-run...

a) Using the AS-AD model, graphically illustrate and describe in words what happens to the long-run and short-run equilibrium level of aggregate output and inflation, when the economy is hit by a negative demand shock and the fiscal policy responds to the shock. Make sure you properly label all the axes and curves. Be specific to describe how the fiscal policy can act in this case. b) Describe the government spending multiplier and how it would affect the fiscal policy...

Suppose that in the Solow growth model the saving rate is 30 percent (s=0.03), population growth...

Suppose that in the Solow growth model the saving rate is 30 percent (s=0.03), population growth rate is 2 percent (n=0.02), depreciation rate is 8 percent (d=0.08), and production fuction is F(K,N)=zK^0.4N^0.6. a) Suppose that z=2. What is the steady state level of captial per worker and consumption per worker? b) What is the level of golden rule savings and golden rule capital stock? At the golden rule capital stock, what is the level of consumption per worker? c) Suppose...

True or false and why? In the Harrod-Domar model of economic growth, a country’s per capita...

True or false and why? In the Harrod-Domar model of economic growth, a country’s per capita growth rate depends on its rate of savings, whereas in the Solow model the savings rate has no effect on the per capita growth rate.

Subjects