Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
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Question
Chapter 9, Problem 1QQ
To determine
The output per person.
Expert Solution & Answer
Answer to Problem 1QQ
Option (c) is the correct answer.
Explanation of Solution
Option (c):
When the rate of population growth is 1 percent, the rate of technological progress is 3 percent, the depreciation is 5 percent and the saving rate is 10 percent, the output per person would grow at 3 percent. Thus, option (c) is correct.
Option (a):
When the rate of population growth is 1 percent, the rate of technological progress is 3 percent, the depreciation is 5 percent and the saving rate is 10 percent, the output per person will not grow at 1 percent. Thus, option (a) is incorrect.
Option (b ):
When the rate of population growth is 1 percent, the rate of technological progress is 3 percent, the depreciation is 5 percent and the saving rate is 10 percent, the output per person will not grow at 2 percent. Thus, option (b) is incorrect.
Option (d):
When the rate of population growth is 1 percent, the rate of technological progress is 3 percent, the depreciation is 5 percent and the saving rate is 10 percent, the output per person will not grow at 4 percent. Thus option (d) is incorrect.
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Students have asked these similar questions
1. 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. A change in consumer preferences increases the saving rate.b. A change in weather patterns increases the depreciation rate.c. Better birth-control methods reduce the rate of population growth.
Suppose the Solow model describes an economy. The population grows at a 0.5% rate, and its labour efficiency grows at a 1% rate. Thus, in the steady state, capital per worker grows at a ____ rate.
a.
1.5%
b.
0%
c.
0.5%
d.
1%
Q.2An 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?
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