A8. Consider the basic Solow model with production function Y KaN¹-, saving rate of 16% and depreciation rate of 5%. Which of the following is true? An increase in capital income share a will: = (a) decrease steady-state output per worker but leave the steady-state capital/output ratio unchanged (b) decrease steady-state output per worker but increase the steady-state capital/output ratio (c) increase steady-state output per worker but increase the steady-state capital/output ratio (d) increase steady-state output per worker and leave the steady-state capital/output ratio unchanged

A8. Consider the basic Solow model with production function Y KaN¹-, saving rate of 16% and depreciation rate of 5%. Which of the following is true? An increase in capital income share a will: = (a) decrease steady-state output per worker but leave the steady-state capital/output ratio unchanged (b) decrease steady-state output per worker but increase the steady-state capital/output ratio (c) increase steady-state output per worker but increase the steady-state capital/output ratio (d) increase steady-state output per worker and leave the steady-state capital/output ratio unchanged

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter20: Economic Growth

Section: Chapter Questions

Problem 11SCQ: Would you expect capital deepening to result in diminished1etmns? Why or why not? Would you expect...

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Would you expect capital deepening to result in diminished1etmns? Why or why not? Would you expect improvements in technology to result in diminished returns? Why or why not?
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