Consider the table.

(a) Fill in the missing cells.

(b) Do any of the countries have higher TFP than the United States?

(c) Using what you know about each country, what might help to explain differences between the predicted per capita GDP ( y_P) and the observed value, y_O?

(d) What might help explain why ?

(e) What might cause the differences in a? Is there any country with a equal to what is used in the text?

Production Function Model (U.S. = 1)

	a	yO	kO	yP = ka
Burundi	0.39	0.02	0.01
Brazil	0.44	0.29	0.40
Switzerland	0.35	1.21	1.40
China	0.43	0.24	0.31
Spain	0.42	0.63	1.10
United Kingdom	0.39	0.75	1.11
Croatia	0.33	0.40	0.58
India	0.50	0.10	0.10
Israel	0.46	0.61	0.61
Italy	0.46	0.68	1.32
Kenya	0.57	0.06	0.04
Kuwait	0.75	1.33	0.80
New Zealand	0.43	0.66	0.62
Ukraine	0.44	0.20	0.21
South Africa	0.55	0.23	0.25
United States	0.40	1.00	1.00

Source: Penn World Table 9.0.

Given a production function , if, and :A=2,L=4,S=2

(a) Calculate the steady-state level of capital and output.

(b) Does the above production function exhibit constant returns to scale, or does it exhibit diminishing marginal returns? Explain, and define the difference between these two concepts.

3) What are the key assumptions of the Solow growth model?

Graphically illustrate the Solow model in equilibrium. Label completely. Explain the model.

Graphically illustrate the Solow model in equilibrium. Now illustrate an increase in the depreciation rate to a new equilibrium.

Graphically illustrate the Solow model in equilibrium. Now illustrate an increase in the investment rate to a new equilibrium.

Beginning in a state of equilibrium in the Solow model, graphically illustrate the destruction from a sizeable portion of the capital stock from a war. In a second graph, graphically illustrate the long-run equilibrium. Explain the process and assumptions. Why?

Beginning in a state of equilibrium in the Solow model, graphically illustrate an increase in total factor productivity.

Why does not capital accumulation explain most economic growth and development? What other factors are missing?