Question: Problem 10: The reason why the Romer model predicts sustained economic growth, unlike the Solow model, is that a) Ideas, unlike physical capital, are nonrivalrous

Problem 10: The reason why the Romer model predicts sustained economic growth, unlike the Solow model, is that a) Ideas, unlike physical capital, are nonrivalrous b) Ideas, unlike physical capital, do not depreciate c) The accumulation of new ideas, unlike the accumulation of physical cap ital, does not run into diminishing returns to scale d) All of the above

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https://media.cheggcdn.com/media/e59/e5900ba1-02b0-44ab-8246-fb980e24e7c1/phpDkQ6Ux

=+productivity depends on growth in total factor productivity and growth in the capitallabor ratio. In particular, show that D1Y/L2 Y/L = DA A + a D1K/L2 K/L .

=+ Hint: You may fi nd the following mathematical trick helpful. If z = wx, then the growth rate of z is approximately the growth rate of w plus the growth rate of x. That is, z/z w/w + x/x.

=+ 3. Suppose an economy described by the Solow model is in a steady state with population growth n of 1.8 percent per year and technological progress g of 1.8 percent per year. Total output and