Consider the physical capital accumulation equation below from the Neoclassical growth model K-1 K SY- dK,...

 

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Consider the physical capital accumulation equation below from the Neoclassical growth model K-1 K SY- dK, where Kt is physical capital per worker at time t, Yt is income or GDP per worker at time t, s is the fixed savings rate for the household (0 A) Replicate the graph from the notes that describes the Neoclassical growth model. Make sure that you properly label the graph. Include the steady-state stock of physical capital and income per worker (i.e. K*and Y*). B) Using the Neoclassical growth model graph, show what happens to the steady-state level of capital when the savings rate rises from $1 to s2 (s1 C) Explain why, in the steady-state, income or GDP per worker becomes constant in the Solow model. D) Explain the catch-up effect. Consider the physical capital accumulation equation below from the Neoclassical growth model K-1 K SY- dK, where Kt is physical capital per worker at time t, Yt is income or GDP per worker at time t, s is the fixed savings rate for the household (0 A) Replicate the graph from the notes that describes the Neoclassical growth model. Make sure that you properly label the graph. Include the steady-state stock of physical capital and income per worker (i.e. K*and Y*). B) Using the Neoclassical growth model graph, show what happens to the steady-state level of capital when the savings rate rises from $1 to s2 (s1 C) Explain why, in the steady-state, income or GDP per worker becomes constant in the Solow model. D) Explain the catch-up effect.