Question: Consider the combined model studied in this appendix. Suppose the economy begins on a balanced growth path in the year 2000. Then in 2030, the

Consider the combined model studied in this appendix. Suppose the economy begins on a balanced growth path in the year 2000. Then in 2030, the depreciation rate rises permanently to the higher level ʹ.
(a) Graph the behavior of output per person over time, using a ratio scale.
(b) Explain what happens to the growth rate of output per person over time and why.

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