Chapter 5
The Solow
Growth Model
By Charles I. Jones
5.1 Introduction
In this chapter, we learn:
How capital accumulates over time.
How diminishing MPK explains differences
in growth rates across countries.
The principle of transition dynamics.
The l
Economics 110A
Winter 2015
Dr. Maria Cndido
Student Name:_
Student ID:_
Assigned Seat:_
Economics 110A Midterm Examination Solutions
Winter Quarter 2015
January 30th
Version A
Instructions:
a.
You have 50 minutes to finish your exam. Write your name and I
Economics 110A
Solutions to Chapter 1 Practice Questions
Assess the validity of each of the following statements using graphs, equations, and written
arguments where appropriate.
1. In the perfectly competitive model of supply and demand, the equilibrium
Discussion section, Friday Feb 20, 2015
Practice problem from textbook: ch. 6/#7, p.162
7. Numbers in the Romer model (II) Now suppose the parameters of the model take the following values:
A0 = 100, = 0.06, z = 1/3, 000, and L = 1, 000.
l
(a) What is the
Economics 110A
Solutions to Chapter 7 Practice Questions
1. Consider the bathtub model of unemployment where the exogenous rates of job separation
and job finding are given by 0 < s < 1 and 0 < f < 1. Assume that the total labor force is
exogenously fixed
Economics 110A
Winter 2015
Dr. Maria Cndido
Student Name:_
Student ID:_
Assigned Seat:_
Economics 110A Second Midterm Examination Solutions
Winter Quarter 2015
February 25th
Version B
Instructions:
a.
You have 50 minutes to finish your exam. Write your na
Economics 110A
Practice Questions for Chapter 5
1. Consider the baseline Solow growth model: Suppose that the aggregate production function is
given by the relationship Y = A K L where Y, K, and L, are aggregate output, capital, and
labor
Multiple Choice Sample Questions
Chapter 1
1.
_ variables are parameters to the model and generally are fixed over time, while _ variables
are the outcome of the model.
A. Shocks; parameters
B. Endogenous; exogenous
C. Endogenous; shocks
D. Exogenous; end
Economics 110A
Practice Questions for Chapter 3
Problems:
1. Chinas real GDP per person was 9,280 yuan in 2009 and 10,110 yuan in 2010. Indias real
GDP per person was 30,880 rupees in 2009 and 32,160 rupees in 2010.
a. By maintaining their current growth
University of California, San Diego
Department of Economics
Economics 110A - Macroeconomics
Winter 2015
MWF 10:00 - 10:50 am, Center 101
Instructor:
Maria Teresa Cndido
Office: 110A Economics
Office Phone #: 534-2518
Office Hours: Mondays 11:30 am - 2:00
Economics 110A
Solutions to Chapter 5 Practice Questions
1. Consider the baseline Solow growth model: Suppose that the aggregate production function is
given by the relationship Y = A K L where Y, K, and L, are aggregate output, capital, a
Economics 110A
Solutions to Chapter 3 Practice Questions
Problems:
1. Chinas real GDP per person was 9,280 yuan in 2009 and 10,110 yuan in 2010. Indias real GDP per
person was 30,880 rupees in 2009 and 32,160 rupees in 2010.
a. By maintaining their curren
Chapter 2
REVIEW QUESTIONS
14. These essentially summarize the entire chapter, so I will refrain from answering them.
EXERCISES
1. This is a worked exercise. Please see the text for the solution.
2. (a) GDP rises by $2 million (final sale price of compute
Chapter 3
REVIEW QUESTIONS
1. The first sustained economic growth occurred in England in the late 1700s, and spread across western
Europe over the next few decades. A thousand years ago, living standards were quite equal across
countries Robert Lucas summ
Chapter 1
REVIEW QUESTIONS
13. Based on personal preference.
4. Ingredients: Inputs, the model itself, and outputs. We can call these exogenous variables, equations or
words, and endogenous variables respectively. The best short summary of the power of mo
Chapter 4
REVIEW QUESTIONS
1. Macroeconomic models are also toy versions of the real world that (hopefully) contain the key moving
parts to give us an idea about how the real world really works.
In order to generate real insights, a model of ice cream pro
Economics 110A
Solutions to Chapter 6 Practice Questions
1. Consider the Romer model with a total labor force that is exogenously fixed and given by L .
Assume that:
The labor force is divided into two sectors: direct production of output, Y, and product
Chapter 8
REVIEW QUESTIONS
1. Inflation is a general increase in all prices in the economy, including wages. Inflation eats away at the
real buying power of currency, so those hundred- dollar bills will lose buying power over the years if there
is inflati
Chapter 7
REVIEW QUESTIONS
1. The rise in the employment-to-population ratio is largely driven by women entering the labor market.
The civilian employment-to-population ratio (for noninstitutionalized civilians) fell from 62.8 percent in
2008 to 58.4 perc
Questions for Second Midterm Review
Production Model
1. What are the three main sources of differences in TFPs discussed in the textbook? Can you name
other possible sources? Explain your answer.
Solow Model
2. Assess the validity of the following stateme
Chapter 5
REVIEW QUESTIONS
1. Capital accumulation delivers growth. This makes sense because we can see by looking around
ourselves machines help us produce more output in the same amount of time. Also, since our economic
system is called capitalism,we mi
Chapter 6
REVIEW QUESTIONS
1. Ideas can be copied for free. Objects cannot. Ideas include food recipes, ideas for inventions, the words
in novels or plays, musical scores, and philosophical concepts. Objects include cookbooks, printed novels
or plays, mot
Economics 110A
Practice Questions for Chapter 6
1. Consider the Romer model with a total labor force that is exogenously fixed and given by L .
Assume that:
The labor force is divided into two sectors: direct production of output, Y, and production
of kn
Economics 110A
Solutions to Chapter 4 Practice Questions
Problems:
1. For each of the following production functions where (A>0 is a production technology
parameter), find expressions for the marginal product of capital and the marginal product of
labor.
ECON 110A: Intermediate
Macroeconomic Theory
AGENDA
ECONOMISTS ROLES
ASSUMPTIONS AND MODELS
ENDOGENOUS VS EXOGENOUS
MICRO VS MACRO
POSITIVE VS NORMATIVE
The Economist
Economists play two roles:
1. Scientists: try to explain the world
2. Policy advisors: t
Solution to Problem 1 a) In the usual diagram with the interest rate on the vertical axis and the quantity of money at the horizontal axis, the money demand is a downward sloping curve, because it depends negatively on the interest rate. This negative dep
ECON110A I. Introduction of Macroeconomics 1. Macroeconomics: The study of the economy as a whole - It tries to explain how and why the economy grows and fluctuates over time. 2. Around the world economy 1) Three important variables a. Output and its