Graphically illustrate and explain the effects of an increase in population growth on the Solow growth model. In your answer, you must clearly label all curves and the initial and final equilibria. In your answer, explain what happens to the rate of growth of output per worker and the rate of growth of output as the economy adjusts to this increase in population growth
What will be an ideal response?
An increase in the rate of population growth will also cause the required investment line to become steeper. This will also cause K/NA and Y/NA to fall over time. This implies that during the adjustment process Y will grow slower than the now more rapidly increasing NA. So, the growth rate of Y/N actually temporarily decreases here. Once the new equilibrium is achieved, K and Y will now grow more quickly as a result of the increase in population growth. However, the rate of growth of Y/N is still determined by the rate of TP.
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The process of countries becoming more open to foreign trade and investment is known as outsourcing
Indicate whether the statement is true or false
If at its current production level, a perfectly competitive firm's marginal revenue and long-run marginal cost are equal to $1.50 and its long-run average cost is $1.65, which of the following statements is true?
A) The firm should expect the market price of its product to increase. B) The firm should expect to earn positive economic profit indefinitely. C) The firm should expect the market price of its product to fall. D) The firm should expect the market supply curve to increase.
In the classical model, changes in interest rates will always ensure that
A) consumption equals production. B) saving equals investment. C) consumption equals investment. D) consumption equals income.
If a business finds its production is becoming more efficient as it increases production, the organization is experiencing what specialization advantage?