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Business, 02.02.2021 09:00 rome58

Solow growth model 20
19
18
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Ideas: Work It Out 3 of 4
The diagram depicts the Solow growth model. We can
use this model to determine how the steady-state level of
capital stock and output respond to dillerent changes.
Consider these expressions for output (Y). investment (I).
and depreciation (D):
Y = K
I = 0.3K
D = 0.02 K
that
VI.
What are the new steady-state levels of capital stock (K$5)
and output (YS) if we increase the depreciation rate from
0.02 to 0.03?
to
sou
kss

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Answers: 2

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Solow growth model 20
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18
1
Ideas: Work It Out 3 of 4
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