Question: 1 The Solow Growth Model 1.1 Summary . Production Function: Y (t) = F(K (t) , A (t) I (t) ). (1) . Accumulation of

1 The Solow Growth Model 1.1 Summary . Production Function: Y (t) = F(K (t) , A (t) I (t) ). (1) .

Accumulation of capital: K(t ) = =Y (t) - 8K (t) .

(t ) L (t) . Technology: A(t) A (t) =9#A(!) =4(0).. .

Production Function (1) exhibits constant-returns-to-scale (CRTS). This implies that: y = f

1 The Solow Growth Model 1.1 Summary . Production Function: Y (t) = F(K (t) , A (t) I (t) ). (1) . Accumulation of capital: K(t ) = =Y (t) - 8K (t) . (2) . Note: K (t ) dK (t) de . Labor: L (t ) L (t) . Technology: A(t) A (t) =9#A(!) =4(0).. . Production Function (1) exhibits constant-returns-to-scale (CRTS). This implies that: y = f (k) , (3where y = Y/AL and k = K/AL. . Expression (3) represents the production function (1) written in in- tensive form. . Assumptions about (3): (i) f(0) = 0, (ii) f (k) >0, (iii) f" (k)

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