Following World War II, many countries, including the United States, experienced a baby boom— an increase in the growth rate of the population.
a. Use the Solow model to demonstrate the effect of a baby boom on the steady-state capital–labor ratio.
b. Explain the effect of the baby boom on real GDP and on the standard of living.
c. The U.S. economy experienced strong growth in real GDP per capita during the years of the baby boom. Reconcile this fact with your answer to part b.