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Unformatted text preview: Savings and investment can lead to persistent growth v. Solow: higher savings leads to growth temporarily but diminishing returns to capital forces the economy to approach steady state Practice problem tips o If real GDP grows 3% n + g = .03 o Capital income is 30% of GDP MPK* k = .3y Okuns Law: negative relationship between unemployment and GDP o Percentage Change in Real GDP = 3.5% - 2 * Change in Unemployment Rate...
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This note was uploaded on 09/13/2009 for the course 220 204 taught by Professor Clare during the Spring '08 term at Rutgers.
- Spring '08