Suppose the parameters of the Romer model take the following values:
And
What is the growth rate of this country's economy?

Question

Suppose the parameters of the Romer model take the following values:  
And 
What is the growth rate of this country's economy?

Quizplus · Accepted Answer

The growth rate of the economy in the Romer model is given by:
g = a (1 - b) - d
where a is the parameter for the level of technology, b is the parameter for the spillover effect of knowledge, and d is the rate of depreciation of physical capital. 
Using the given values of a, b, and d, we get:
g = 0.02 (1 - 0.5) - 0.01
g = 0.01
Therefore, the growth rate of this country's economy is 10 percent, which corresponds to option B.

Suppose the Parameters of the Romer Model Take the Following