Growth problem set

# Growth problem set - LONG-TERM ECONOMIC GROWTH (SECULAR...

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LONG-TERM ECONOMIC GROWTH (SECULAR GROWTH) 1. What can explain the movements in the graph (try to list several events) (i) from A to B? (ii) from B to C? (iii) If the movement from A to C happened over 70 years, what would be the annual growth rate in Y/L? (iv) If the movement from A to B happened over 70 years, what would be the annual growth rate in Y/L? (i) A to B: Investments in more physical capital (K), or a fall in the amount of workers, for instance through emigration. (ii) B to C: Better technology/innovations, more human capital (i.e. better training or education) (iii) We know that years to double = 70/growth rate. From A to B is a doubling of Y/L. If the doubling took 70 years, the growth rate is 1% annual growth. K/L 0 10,000 25,000 40,000 20,000 15,000 10,000 5,000 0 A B C Y/L

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2. Draw a production function and mark the point you are at on the production function. Mark the level of capital per worker and output per worker in the starting point. (No need for numbers). (i) Show in the graph what would happen if there was a hurricane that destroyed a large part of the capital in the country. (ii)
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## Growth problem set - LONG-TERM ECONOMIC GROWTH (SECULAR...

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