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note_6 - Econ 102 Spring 2011 TA Note for Week 6 Sangyup...

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Econ 102 Spring 2011 TA Note for Week 6 Sangyup Choi([email protected]) Solow Growth Model(continued) 1. T/F questions. (a) If k ss is above k gold then it is always e¢ cient to move to k gold : True (b) If k ss is below k gold then it is always e¢ cient to move to k gold : False 2. Kaldor Facts (possible multiple question) (a) Y t K t is constant. (predicted by the model) (b) 1 are constant. (over a long period of time) (c) MP K is constant (r is roughly constant) (d) growth rate of k and y are constant (predicted by the model) 3. Possible questions regarding the steady state (a) Write down the equation we need to determine the steady state level of k and interpret each side of the equation. (b) Write down the equation gives us the change in k. (c) Show how capital stock converges to steady state level (divide in two cases: initial capital stock is greater than steady state level of capital or less than. ..) (d) Suppose an earthquake happened so half of steady state level of capital is de-
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note_6 - Econ 102 Spring 2011 TA Note for Week 6 Sangyup...

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