Linking the Solow framework with real returns on capital.
a. Using the Solow framework, explain why faster population growth would increase the real returns to capital in the long run steady state.
b. At China's current stage of development, what are the factors that make its returns to capital so much higher than that of a mature economy such as the United States?

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The Answer of Linking the Solow framework with real returns on capital.
a. Using the Solow framework, explain why faster population growth would increase the real returns to capital in the long run steady state.
b. At China's current stage of development, what are the factors that make its returns to capital so much higher than that of a mature economy such as the United States?

Linking the Solow Framework with Real Returns on Capital