1) How the capital per worker and output per worker is determined in the Solow growth model? What are the factors that determine the level of output per worker in the Solow growth model?

2)

a. Explain the Purchasing power parity hypothesis?

b. What could be the effect of an increase in the interest rate by the European Central Bankon the Euro-TL exchange rate? Does TL appreciates or depreciates? Why?

3) How consumption is determined according to Intertemporal Choice model, Keynesian Theory of Consumption and Permanent Income hypothesis? Write the basicsimilarities and differences of these models.

(homework)