Consider Romer’s growth model of Chapter 6 and let ¯ A 0 = 100, ¯ l = 0 : 06, ¯ z = 1 = 3000, and ¯ L = 1000.
a) What is the growth rate of output per person in this economy?
b) What is the initial level of output per person? What is the output per person in 100 years?
c) How do your answers in parts a;b change if the following changes occur? A doubling of ¯ A 0 , a doubling of ¯ l , a doubling of the population ¯ L , and a doubling of ¯ z . (Note: Explain these changes one at a time).
d) If you could advocate for one of the changes above, which one would you choose? Why?