. Answer the two questions below, both of which is about a simple Solow model. A...

 

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. Answer the two questions below, both of which is about a simple Solow model. A "simple Solow model" is one that excludes TFP (total factor productivity) growth, growth in labor efficiency, and population growth. In short, g=n=0%. Take it for granted that gross investment (sY. savings rate times investment) is always strictly positive and that the production function is a very standard Cobb-Douglas. There are no tricks here. Answer I and II, and explain your economic reasoning in each case in two or three sentences. I. What's the most accurate way to think about capital in a simple Solow model? II. What's the most accurate way to think about GDP growth in a simple Solow model? . Answer the two questions below, both of which is about a simple Solow model. A "simple Solow model" is one that excludes TFP (total factor productivity) growth, growth in labor efficiency, and population growth. In short, g=n=0%. Take it for granted that gross investment (sY. savings rate times investment) is always strictly positive and that the production function is a very standard Cobb-Douglas. There are no tricks here. Answer I and II, and explain your economic reasoning in each case in two or three sentences. I. What's the most accurate way to think about capital in a simple Solow model? II. What's the most accurate way to think about GDP growth in a simple Solow model?

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I In a simple Solow model capital can be thought of as the key driver of economic output and growth ... View the full answer