*note* in this homework assignment, u = miu and Un = natural rate of unemployment
1. A) Ex ante: a*z+1/b*u Ex post: 1/1+u. They can be different in the short run because
people expect prices to be either higher or lower than what they actual
a. (Y/AN)* = (d+.03+.03)(Y/AN)^2.5/s.
b. Y=ga+gn=.06, Y/N=ga=.03, Y/AN=0
c. Capital per worker and overall capital grow at the steady state because of
technological progress. Once the technology
Economics Homework #5
a. The solow/swan model shows that capital accumulation alone cant explain
long run growth, so there must be other exogenous factors involved. It can,
however, explain transitory growth.
b. The steady state of output