By NEAS - 8/15/2018 4:32:54 PM
Macro Module 4 Solow growth model real savings practice exam questions
(The attached PDF file has better formatting.)
Question 4.1: Real savings
An economy that follows a simple Solow growth model has
● real savings = 84
● depreciation rate = 5.58%
● real GDP = 640
● capital = 6,470
What is the savings rate in this economy?
Answer 4.1: 84 / (640 – 6,470 × 5.58%) = 30.11%
real savings = savings rate × net income = savings rate × (gross income – depreciation rate × capital) ➾
savings rate = real savings / (gross income – depreciation rate × capital)
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