Problem
1. Using the standard Solow growth model show graphically and in detail explain what happens when a country receives foreign aid on their steady state level standard of living. Make sure to discuss this for all cases.
2. What does "conditional convergence" mean in the context of the Solow growth model? Also what does the term "golden rule" mean?
3. What are the fundamentals to determining a countries standard of living? Show graphically how each can change a countries steady state. What are negatives of creating policies that change these fundamentals?
4. Using a Solow model assuming the production function Y=K.75N.25 . What is the k, y, and c in steady state if the savings rate is 20%, population growth is 10%, and depreciation is 5%? Make sure to show all of the calculations completely.
5. Define marginal product of capital and the marginal product of labor. Show graphically how increases in each (how would these increase) impact either the labor market or the goods market.
6. What are the differences in the key assumptions of the three different kinds of economies we considered in the Goods Market? For each show what happens to S, I, and NX when there is an increase in population.
7. Considering a closed economy, a small open economy, and a large open economy. In which economy is the effect of a decrease in MPK greatest on the level of savings in the economy. Show the change in level of savings graphically for these three economies.
8. Suppose you are considering the labor market and the production function. What happens to wages, output, and employment if more and more women enter the labor market while there have been advancements in technologies? Show this graphically.
9.
1. Using the labor market and production function:
During the Great Recession many Americans lost a significant percentage of their portfolio. What would this do to wages, output, and employment?
Suppose that there is a significant increase in technology with cloud computing and other advances in computer uses in business. What happens to wages, output, and employment?
Suppose that both of these effects happened at the same time. What would you expect to happen to wages, output, and employment?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.