Tutorial 10_2010 - ECON1002 Introductory Macroeconomics S2 2010 1 TUTORIAL 10(Week 11 beginning 11th October Reading Guide BOF Chapters 13 and 14

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ECON1002 Introductory Macroeconomics, S2 2010 Tutorial Tasks 1 Reading Guide : BOF Chapters 13 and 14. You should also look over your lectures notes for Week 10. Key Concepts: Diminishing marginal productivity , Steady state, Total factor productivity, the Solow Swan model, and Endogenous growth. R EVIEW OF C ONCEPTUAL U NDERSTANDING These are to be attempted before the tutorial. They will not normally be covered in the tutorial, maybe, except for a quick review, time permitting. The answers are typically found in the textbook and lecture notes. 1. What do you understand by the concepts of diminishing marginal productivity and the constant returns to scale? How realistic are they? Are they useful in understanding economic growth? 2. Why do we use per capita production function in the analysis of economic growth? 3. What is the mechanism by which the Solow-Swan model explains economic growth? 4. What is endogenous growth? P ROBLEMS 1. How would you respond to the following argument: ‘Economic theory makes no sense. For example, poor countries have very little capital. But capital has diminishing marginal productivity. So, in poor countries, the marginal productivity of capital must be high. But then if capital is so productive in
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This note was uploaded on 12/14/2010 for the course ECON 1002 taught by Professor Markmelatos during the Three '10 term at University of Sydney.

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Tutorial 10_2010 - ECON1002 Introductory Macroeconomics S2 2010 1 TUTORIAL 10(Week 11 beginning 11th October Reading Guide BOF Chapters 13 and 14

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