Question: Thank You so so much Question I [25 points]: We consider the classical Solow model with technical progress, which is based on following assumptions/concepts: (a)
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Thank You so so much
Question I [25 points]: We consider the classical Solow model with technical progress, which is based on following assumptions/concepts: (a) Macroeconomic balance: S(t)=I(t), in which S(t) represents savings at date t, and I(t) represents investment at date t. (b) Physical capital accumulation: K(t+1)=(1)K(t)+I(t), which implies that investment augments the national capital stock (K) and replaces a fraction of the capital stock which is wearing out (depreciation). (c) The savings rate is savings divided by total national income, denoted by s=S(t)/Y(t). (d) There are two inputs in production: capital K(t) and population P(t), and the production function is Y(t)=AK(t)(E(t)P(t))1, in which 0
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