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- 3. An economy described by the Augmented Solow growth model has the following production function with populationgrowth (1+n) and technological growth (1+z):y =p(k)(a) Solve for the steady-state values of capital per capita and output as a function of s, n, z, and δ.(b) A developed country has a saving rate of 28 percent and a population growth rate of 1 percent per year. A lessdeveloped country has a saving rate of 10 percent and a population growth rate of 4 percent per year. In bothcountries, g = 0.02 and d = 0.04. Find the steady-state value of y for each country.(c) What policies might the less developed country pursue to raise its level of income? Graphically demonstrate howyour advised policy would increase income per capita (y).Two important economic growth drivers are a country's rate of savings and its rate of technological progress. Using the Solow framework, explain the effects of: (1) an increase in the saving rate and (2) an increase in technology on output per person during the transition and in the very long term. Please show it using a graph and explanation. Thank youBased on article "Technology and economic growth: From Robert Solow to Paul Romer" by Rui Zhao, Solow mentioned technology (At) and capital per unit of effective labor (Kt) have a significant influence on a country's ability to “catch-up” or “converge” to a steady-state level (K*). Using the central equation of the Solow model, discuss the influence of At and Kt on country's ability to grow and move to a steady-state level (K*).
- Q.2 An economy described by the Solow growth model has the following production function: y=√k a)A developed country has a saving rate of 28 percent and a population growth rate of 1 percent per year. A less developed country has a saving rate of 10 percent and a population growth rate of 4 percent per year. Inboth countries, g = 0.02 and d = 0.04. Find the steady-state value of y for each country. b)What policies might the less developed country pursue to raise its level of income?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 ..Assume that an economy is described by the Solow model in the long run. The rate of population growth in this economy isn=0.01 and the rate of technological growth is g= 0.02. What are the long-run (steady state) growth rates of total GDP, GDP per worker, and GDP per effective worker?
- 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. A change in weather patterns increases the depreciation rate. b. Better birth-control methods reduce the rate of population growth.An economy described by the Solow growth model has the following production function: y = Vk A. Solve for the steady-state value of y as a function of s, n, g, and d. B. A developed country has a saving rate of 28 percent and a population growth rate of 1 percent per year. A less developed country has a saving rate of 10 percent and a population growth rate of 4 percent per year. In both countries, g = 0.02 and d= 0.04. Find the steady- state value of y for each country. C. What policies might the less developed country pursue to raise its level of income?The amount of education the typical person receives varies substantially among countries. Suppose you were to compare a country with a highly educated labor force and a country with a less educated labor force. Assume that education affects only the level of the efficiency of labor. Also assume that the countries are otherwise the same: they have the same saving rate, the same depreciation rate, the same population growth rate, and the same rate of technological progress. Both countries are described by the Solow model and are in their steady states. What would you predict for the following variables? a. The rate of growth of total income. b. The level of income per worker. c. The real rental price of capital. d. The real wage.
- The amount of education the typical person receives varies substantially among countries. Suppose you were to compare a country with a highly educated labor force and a country with a less educated labor force.Assume that education affects only the level of the efficiency of labor. Also assume that the countries are otherwise the same: they have the same saving rate, the same depreciation rate, the same population growth rate, and the same rate of technological progress. Both countries are described by the Solow model and are in their steady states. What would you predict for the following variables?a. The rate of growth of total income.b. The level of income per worker.c. The real rental price of capital.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.Japan is experiencing a decrease in population and increase in technology. Under which condition Japan will experience economic growth (increase in output per labor)? Analyze using the Solow growth model. Show your answers graphically. Describe using maximum 3 sentences.
