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This is a Solow model question. There is no government and no foreign sector. In equilibrium savings (S) must equal (I) investment. Agents save a
This is a Solow model question. There is no government and no foreign sector. In equilibrium savings (S) must equal (I) investment. Agents save a constant fraction of output according to S = sY
Output is given by a Cobb-Douglas production function Y = K" (QN) 1-a. Q is labor-augmenting technological progress and grows such that Q' = (1 + q) Q Growth of capital is described by K' = K(1 - d) + I Population grows according to N' = (1 + n)N Define little letters as big ones divided by QNStep by Step Solution
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