Macro Module 4 Solow growth model depreciation rate practice exam...

 Author Message NEAS Supreme Being Group: Administrators Posts: 4.3K, Visits: 1.3K Macro Module 4 Solow growth model depreciation rate practice exam questionsQuestion 4.1: Depreciation rateAn economy follows a Solow growth model with no technological progress. In equilibrium s = savings rate = 26.95%y* = steady state income per worker = 189 units per worker per annum k* = steady state capital per worker = 849 units per workern = population growth rate = 1.87% per annum What is the annual depreciation rate of capital in the steady state?A.    13.94%B.    14.40%C.    14.86%D.    15.32%E.    15.78%Answer 4.1: steady state growth rate of capital per worker is zero, so s × (y/k) – sδ – n = 0 ➾ 26.95% × (189 / 849) – 26.95% × δ – 1.87% = 0δ = (0.2695 × (189 / 849) – 0.0187) / 0.2695 = 15.32% Attachments Macro Module 4 Solow growth model depreciation rate practice exam questions.pdf (384 views, 35.00 KB)
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