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ANSWER QUESTION H!!!

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Use the Solow model to evaluate this question. You are the chief economic advisor to a small Caribbean country with an aggregate per capita production function of y = 3k%. The savings rate is 6%, and the rate of depreciation is 10%. Population grows at a rate of 4%. There is no technological progress. h. (2) Say that the economy is originally in the steady state identified in part b when population growth decreases to 2%. Explain in words what happens to the growth rate and level of output per capita, being sure to address what happens both in the short run and in the long run. Gall Mountain equation keti - ke sye - (6th) ke 2u steady KERK strady so Stakla ualim s Tin Guntele suberkitely hevelure, DOL 10 Steady state 165 ya Mris vas values. -s(0 0 > OA) OB. suring function sy Doe- At sy = (8th) a where ready state capital kl. 165 (( 6 k f(k) sth Mumtial nu 0.04401 K. > TES 3X Calculated in part (as also). Euslim wed (as Caldosted in (e)) k -S f(k) in Nawi) w 3 04401 KH ly = 35765 = 3.85 (calculated in part (a) also). we knew k-1.65 to when we start with too much spiel, at ky (m) 7 ST) lui Ontal suttit his sont the we la cajat, et dful in Mr an ho dives ud (64) brews equal to spl) we nach stacky chce. e-4 (i) Investment per werken: Stk) - 0.06x314 = 0-36 (il Break-cun inesment (Sn) R (0.1 +0.04) 4 0.56 y Out f) 3V 34 Campher for cook c) Hk) s ples = (1-0 06) 6 0.946 = 224 564 olt her workra B.E. Inwest- ment 61 f(k) Istm) (= 5.64 0.56 0.36 9* Sfk) Inuestment i - 0.36 k* k=4 Capital per worker we can se eti-y. 36=6=4 je 5.64+ 0.36=6= Use the Solow model to evaluate this question. You are the chief economic advisor to a small Caribbean country with an aggregate per capita production function of y = 3k%. The savings rate is 6%, and the rate of depreciation is 10%. Population grows at a rate of 4%. There is no technological progress. h. (2) Say that the economy is originally in the steady state identified in part b when population growth decreases to 2%. Explain in words what happens to the growth rate and level of output per capita, being sure to address what happens both in the short run and in the long run. Gall Mountain equation keti - ke sye - (6th) ke 2u steady KERK strady so Stakla ualim s Tin Guntele suberkitely hevelure, DOL 10 Steady state 165 ya Mris vas values. -s(0 0 > OA) OB. suring function sy Doe- At sy = (8th) a where ready state capital kl. 165 (( 6 k f(k) sth Mumtial nu 0.04401 K. > TES 3X Calculated in part (as also). Euslim wed (as Caldosted in (e)) k -S f(k) in Nawi) w 3 04401 KH ly = 35765 = 3.85 (calculated in part (a) also). we knew k-1.65 to when we start with too much spiel, at ky (m) 7 ST) lui Ontal suttit his sont the we la cajat, et dful in Mr an ho dives ud (64) brews equal to spl) we nach stacky chce. e-4 (i) Investment per werken: Stk) - 0.06x314 = 0-36 (il Break-cun inesment (Sn) R (0.1 +0.04) 4 0.56 y Out f) 3V 34 Campher for cook c) Hk) s ples = (1-0 06) 6 0.946 = 224 564 olt her workra B.E. Inwest- ment 61 f(k) Istm) (= 5.64 0.56 0.36 9* Sfk) Inuestment i - 0.36 k* k=4 Capital per worker we can se eti-y. 36=6=4 je 5.64+ 0.36=6=

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