Consider a Solow growth model with the production function ; ; where, is aggregate output at time ; is aggregate capital stock at time ; is the number of workers at time . There is population growth but no technology growth. Let be the savings rate, be the population growth rate, and be the rate of depreciation of capital stock.
What is the growth rate of aggregate output at steady state?
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Consider a Solow growth model with the production function Yₜ=Kₜ^α Nₜ^(1-α); 0<α<1; where, Yₜ is aggregate output at time t; Kₜ is aggregate capital stock at time t; Nₜ is the number of workers at time t. There is population growth but no technology growth. Let 0<s<1 be the savings rate, 0<n<1 be the population growth rate, and 0<δ<1 be the rate of depreciation of capital stock. What is the growth rate of aggregate output at steady state? (A) n (B) s+n (C) n+δ (D) 0
Also written as: Consider a Solow growth model with the production function Y_t=K_t^(alpha) N_t^(1-alpha); 0<alpha<1; where, Y_t is aggregate output at time t; K_t is aggregate capital stock at time t; N_t is the number of workers at time t. There is population growth but no technology growth. Let 0<s<1 be the savings rate, 0<n<1 be the population growth rate, and 0<delta<1 be the rate of depreciation of capital stock. What is the growth rate of aggregate output at steady state?
Harrod–Domar and Solow growth models has come up 113 times in 7 exams since 2006.
This question is on The Solow model and its steady state, part of Harrod–Domar and Solow growth models in Economics of Growth and Development.
Growth with substitutable factors: capital per worker settles where saving covers depreciation and dilution.
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