Graphically illustrate and explain the effects of an increase in the rate of technological progress 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 the rate of technological
progress.
What will be an ideal response?
The increase in the rate of TP will cause the required investment line to become steeper. K/NA and Y/NA will fall over time to some permanently lower level. The increase in the rate of TP will cause the rate of growth of Y and Y/N to increase over time and to reach a permanently higher level.
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An individual's demand curve
a. represents the various quantities that a consumer is willing to purchase of a good at various prices. b. is derived from an individual's indifference curve map. c. will shift if preferences, prices of other goods, or income change. d. all of the above.
Transaction costs increase the economic value of an exchange
Indicate whether the statement is true or false
A budget constraint illustrates bundles that a consumer prefers equally, while an indifference curve illustrates bundles that are equally affordable to a consumer
a. True b. False Indicate whether the statement is true or false
Which circumstance is most likely to cause a farmer to store soybeans for future sale instead of selling them right after harvest?
(A) Inflation is running at 25 percent. (B) The government lifts restrictions on the importation of soybeans. (C) A new technology decreases the chance of rot. (D) The government imposes an excise tax effective next year.