By NEAS - 8/15/2018 4:30:10 PM
Macro Module 4 Solow growth model depreciation rate practice exam questions
(The attached PDF file has better formatting.)
Question 4.1: Population growth rate
An economy follows a Solow growth model with no technological progress. In equilibrium
s = savings rate = 28.45%
y* = steady state income per worker = 162 units per worker per annum
δ = depreciation rate of capital = 5.14% per annum
k* = steady state capital per worker = 877 units per worker
What is the population growth rate in the steady state?
Answer 4.1: 28.45% × (162 / 877 – 5.14%) = 3.79%
(steady state growth rate of capital per worker = 0 = s × (y/k) – sδ – n ➾ s × (y/k) – sδ
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