Unformatted text preview: Short-Answer Questions 29. [35 points] In answering this question please be sure to properly label, as
appropriate, all lines/curves, how they shift, and the relevant points in your diagram. Suppose you were analyzing a country experiencing a rise in its population growth rate
at the same time that its saving rate was dropping. [a] Using the Solow model, what would be the effect of these developments, once the
economy is at its new steady state equilibrium, on the K/ L ratio, investment per unit of
labor, and productivity and income per unit of labor? Please show how you arrived at
your answer using the standard graph of the Solow model (see below). [frag/woman :9 and Imcﬂmé f’ﬁtb‘ 0,3,1: 7‘ We Lﬂéﬂl’” L2.
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- Fall '09