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If the increase in labor is due entirely to population growth, will the resulting increase in output have an effect on people's welfare?
Output is growing at 3 percent per year and capital's and labor's shares of income are .3 and .7 respectively. What both labor and the capital stocks are fixed?
What factors determine the growth rate of steady-state per capita output? Are there other factors that could affect the growth rate of output in the short run?
What, besides technological progress, would this residual catch? How could you expand the model to eliminate this problem?
How much was US real GDP growth in year 2008? What about the growth rate of US population? What can you infer about evolution of US per capita real GDP in 20.
How much nominal interest will you receive if inflation is 4 percent over the year and the bond promises a real return of 3 percent?
How much value is added to the flour, yeast, sugar, and salt when the bakers turn them into bread?
Suppose you make a loan of $100 that will be repaid to you in 1 year. What if the loan instead had been denominated in terms of a real return?
Explain why the classical supply curve is vertical. What are the mechanisms that ensure continued full employment of labor in the classical case?
What is the difference between absolute and conditional convergence, as predicted by the neoclassical growth model? Which seems to be occurring, empirically?
What sorts of capital investment does suggest are most useful for explaining long-run equilibrium growth?
What factors could lead to an increase in total manufacturing output, while employment and average hours worked fell considerably?
Explain anything that a simpler two-sector model with a fixed rate of growth, or a one-sector model with variable population growth, cannot?
What does the investment requirement line look like for this model? Does output in any of these equilibria have nonzero per capita growth?
What does the production function for this problem look like? What can this model help us explain that strict endogenous and neoclassical growth models cannot?
What elements of neoclassical and endogenous growth models can help us explain the remarkable growth of the group of countries known as the Asian Tigers?
Now suppose we have an endogenous growth model. How will a lower population growth rate affect the society's long-term growth potential?
Create a situation in which a single large firm dominates the economy, as traditional microeconomic reasoning would suggest?
What is endogenous growth? How do endogenous growth models differ from the neoclassical models of growth presented?
Show the new steady-state equilibrium. What has happened to per capita saving and the capital-labor ratio? What happens to output per capita?
What are capital's and labor's shares of income? At what rate is per capita output growing at the steady state? At what rate is total output growing?
What will happen to output per head if capital and labor both grow but Z is fixed?
Discuss the adjustment process of the economy, and using Figure 3-5 , show what happens to growth in the short run and in the long run.
What would be the effect (on output) of increasing the capital stock by 10 percent? What would be the effect of increasing the pool of labor by 10 percent?
If both labor and capital grow at 1 percent per year, what would the growth rate of total factor productivity have to be?