ECO3203 Problem Set 1
1. The Exchange Traded Fund SPY (one of the highest-volume index ETFs) tracks the S&P 500. From
1995 to 2015 it effectively doubled twice after adjusting for inflation (and assuming an investor
reinvested any dividends/distributions)
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Problem Set 2 ECO 3203
a. = + 1
Note: Labor is not included in equation as it is fixed)
b. Yes, per capita GDP is defined by the relationship Y/L.
c. = ( )1/3 2/3
d. When Kt gets smaller, the growth rate also decreases an
Budget deficits result when the government borrows money to finance its spending.
Trade deficits result when one economy borrows from another.
A model operates on the exogenous variables (inputs) and parameters (input that is generally fixed) i
Life expectancy at
The Solow Growth Model 151
Trinidad and Tobago
United Arab Emirates