Question 1

What is the difference between convergence and conditional convergence with respect to predictions of the Solow growth model? Explain.

Accepted Answer

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Question 2

The economy of Macroland can be described by the Solow growth model. In Macroland the labor force grows at 3 percent per year, labor-augmenting technology increases at 2 percent per year, the saving rate is 15 percent per year, and the rate of capital depreciation is 10 percent per year. Choosing from among the following variables-output per effective worker, output per worker, total output, labor force, capital per worker, and capital per effective worker-which variables will be growing at a:
a. 2 percent rate?
b. 3 percent rate?
c. 5 percent rate?
d. 0 percent rate?

Accepted Answer

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Question 3

What is the Solow residual?
b. Compare Prescott's interpretation of the fluctuations of the Solow residual over the business cycle with more standard explanations of these fluctuations.

Accepted Answer

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b. Compare Prescott's...

Question 4

Income per person exceeds $25,000 in many countries, but it is below $1,000 per person in many other countries. Based on the Solow growth model, suggest at least four possible explanations for this gap in living standards.

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Question 5

Explain why additional capital generates both positive and negative impacts on steady-state consumption per worker in the Solow growth model with population growth and technological change.

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Question 6

Suggest three explanations for the productivity slowdown experienced since 1972.

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Question 7

The Solow model with population growth and labor-augmenting technological progress predicts balanced growth in the steady state. Growth rates of which variables are predicted to be balanced (i.e., will be equal) in the steady state?

Accepted Answer

The answer of The Solow model with population growth and...

Quiz 9: Introduction to Economic Fluctuations

What is the difference between convergence and conditional convergence with respect to predictions of the Solow growth model? Explain.

What is the Solow residual? b. Compare Prescott's interpretation of the fluctuations of the Solow residual over the business cycle with more standard explanations of these fluctuations.

Income per person exceeds $25,000 in many countries, but it is below $1,000 per person in many other countries. Based on the Solow growth model, suggest at least four possible explanations for this gap in living standards.

Explain why additional capital generates both positive and negative impacts on steady-state consumption per worker in the Solow growth model with population growth and technological change.

Suggest three explanations for the productivity slowdown experienced since 1972.

The Solow model with population growth and labor-augmenting technological progress predicts balanced growth in the steady state. Growth rates of which variables are predicted to be balanced (i.e., will be equal) in the steady state?