# S07EX11 - Econ 365 Spring 2007 MIDTERM 1(Total Points 100 M...

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Econ 365 M. Muniagurria Spring 2007 MIDTERM 1 (Total Points: 100) (I) Basic Solow Model with population growth (without technological change) (The relevant equations are given in the attached handout) (1) (6 pts) Write down the equations of for : - output per worker as a function of the capital per worker - change of capital per worker as a function of capital per worker. (2) (10) What are the conditions that need to be satisfied along a balanced growth path (BGP) for the original system (or the steady state of the modified system in per worker variables)? Draw a diagram to identify the level of capital per worker along a BGP. (3) (6 pts) What are the growth rates of output per worker and total output at the BGP? (4) (6) Suppose country A and country B are identical in every aspect except that country A has a higher savings rate than country B. Can you tell whether consumption per worker along the BGP will be higher in county A than in country B? Justify (no need to draw a diagram)

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