N1

5. In the Solow model, let A increase by 20% every year exponentially (so gA = .20). Let a = ? (a) By what percentage does k* increase each year? Pick an answer and explain. i. .10 ii. .20 iii. .30 (b) Does the ratio change over time? Pick an answer and explain. i. Yes ii. No5. In the Solow model, let A increase by 20% every year exponentially (so gA = .20). Let a = ? (a) By what percentage does k* increase each year? Pick an answer and explain. i. .10 ii. .20 iii. .30 (b) Does the ratio change over time? Pick an answer and explain. i. Yes ii. No