Consider the model of endogenous population growth that we summarized in Figure 3.2.

Figure 3.2.

Suppose that the curve describing population growth rates always lies below the line describing growth of total incomes. Explain this situation in words and describe what per capita growth rates will look like (over time) for an economy that starts from a low initial per capita income.

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Various Growth Rates Population Growth Rate Growth Rate of Total Income Trap Growth Rate of Per Capita Income Threshold Per Capita Income Figure 3.2. Endogenous population growth and economic growth.