The Economy of Macroland Can Be Described by the Solow

question 4

Essay

The economy of Macroland can be described by the Solow growth model.In Macroland the labour force grows at 3 percent per year,labour-augmenting technology increases at 2 percent per year,the saving rate is 15 percent per year,and the rate of capital depreciation is 10 percent per year.Choosing from among the following variables: output per effective worker,output per worker,total output,labour force,capital per worker,and capital per effective worker,which variables will be growing at a:
a.2 percent rate?
b.3 percent rate?
c.5 percent rate?
d.0 percent rate?

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Definitions:

Economic Function

The role or purpose that an entity or phenomenon serves within the broader economy, such as production, distribution, or consumption.

Profits and Losses

Financial outcomes of a business's operations where profits represent the excess of revenues over expenses and losses reflect the opposite.

Distribution of Income

The way in which the total income earned in an economy is divided among its citizens or factors of production.

Resource Reallocation

The process of redistributing resources from less productive to more productive uses to increase overall efficiency or to meet strategic objectives.