Answered step by step
Verified Expert Solution
Question
1 Approved Answer
2)a.In our work thus far with the Romer model we have used a production function for ideas given by: dA di form: da =
2)a.In our work thus far with the Romer model we have used a production function for ideas given by: dA di form: da = = aNRA. Suppose we alter the production function for ideas and write it in the following aNRA,0 < 1? b. Using our new production function for ideas, find the equation for the growth rate of technology. c. Using our new production function for ideas, find the steady-state value for the growth of technology. Explain how you arrived at this equation. d. Using your answer from part c, explain how a change in each of the elements in your equation affect the steady-state value for the growth of technology. Why do these changes make economic sense? e. Suppose the growth rate of population increases. Assuming that SR and Sy are constant, what must happen to the growth rate of researchers,gN,? f. Using the Solow diagram, what will happen to the steady-state values of and ANY when the growth rate of the population increases? ANY g. What will happen to the growth rate of the standard of living, as a result of the increase in the growth rate of the population?
Step by Step Solution
★★★★★
3.47 Rating (163 Votes )
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started