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Assign4-2 - University of Southern California Department of...

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\ University of Southern California Department of Economics ECON 205 Principles of Macroeconomics Spring 2009 Prof. Safarzadeh Assignment # 4 Student Name :_________________ I. Answer the Following questions: 1. You read in the paper that real per capita GDP is growing at a rate of 3.5%. During the same period, capital per unit of labor is growing at a rate of 2.4%. Use the Solow’s 1/3 rule to find the contribution of capital per worker (K/ N) growth to per capita GDP (Y/N) growth ______________________. What is the contribution of productivity to per capita GDP growth? _______________________. If labor is growing at a rate of 1.5%, what is the rate of growth of capital at this time? _____________ What is the rate of real GDP growth at this time? _______________. Now, suppose that the economy is at the steady state equilibrium. What will be the rate of growth of capital per worker (K/N) at the steady state equilibrium? ____________________ What will be the rate of per capita GDP (Y/ N) growth at the steady state equilibrium? What will be the rate of growth of capital (K) at the steady state equilibrium? ____________________ What will be the rate of GDP growth at the steady state equilibrium? 2. Banana Republic’s real per capita GDP is growing at a rate of 2.5%. During the same period, capital per unit of labor is growing at a rate of 1.5%. Use the Solow’s 1/3 rule to find the contribution of capital per worker (K/N) growth to per capita GDP (Y/N) growth ______________________. What is the contribution of productivity to per capita GDP growth? _______________________. If labor is growing at a rate of 1.5%, what is the rate of growth of capital at this time? _____________ What is the rate of real GDP growth at this time? _______________. Now, suppose that the economy is at the steady state equilibrium. What will be the rate of growth of capital per worker (K/N) at the steady state equilibrium? ____________________ What will be the rate of per capita GDP (Y/N) growth at the steady state equilibrium? What will be the rate of growth of capital (K) at the steady state equilibrium? ____________________ What will be the rate of GDP growth at the steady state equilibrium? 3. What is the role of population growth in the classical growth model? Specifically, what is the main determinant of population growth in the classical model? __________________________. What is the relationship between the population growth and capital per unit of labor? ___________________________________________________________________________. What is the relationship between the population growth and real per capita GDP growth? ________________________________________________________________________. What is the relationship between population growth and the steady state at the classical model (what makes the economy stay at the steady state). ___________________________________________________________________________. What is the role of the population growth in the neoclassical growth model? Specifically, what is the main
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determinant of population growth in the neoclassical model?
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