In the typical bathtub, the flow of water into the tub is controlled by a faucet independently of the quantity of water in the tub
How is the bathtub analogy of the steady state in the Solow model different? How does this difference relate to the phenomenon of convergence?
In the Solow model, the flow of investment is determined by the fixed rate of saving and the variable level of output, which depends on the stock of capital, the labor input, and the available technology. It is as if the faucet on the tub were controlled by the level of water in the tub. The convergence phenomenon is that economies with low per capita income have relatively high growth rates. But for economies to converge, all of the determinants of output must be similar. Thus, it is not surprising that convergence is not found among large groups of countries. Among suitably similar economies, evidence of convergence is striking testimony of the importance of diminishing returns. Despite the low level of investment that is feasible in a low-income economy, the growth impact of new capital there is greater than occurs in an otherwise similar high-income economy in which the level of investment is higher.
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According to this Application, in recent years the European Union has reformed its agriculture policies by reducing or eliminating minimum prices. Ceteris paribus, these policy reforms would ________ excess supply by ________ prices
A) increase; lowering B) increase; raising C) reduce; lowering D) reduce; raising
The United States has had:
A. high relative mobility in the last century, and lower absolute mobility. B. low absolute mobility in the last century, but higher relative mobility. C. high absolute mobility in the last century, and lower relative mobility. D. low relative mobility in the last century, and even lower absolute mobility.
The short-run average total cost curve of a monopolistically competitive firm that incurs a loss will lie below the profit-maximizing price–output combination
a. True b. False Indicate whether the statement is true or false
Which of the following occurs when an expansionary gap is closed in the long run by the action of firms?
What will be an ideal response?