Chapter 8: Economic Growth

Question 1

Solow Growth Model

Answer 1

Theory of economic growth
-it shows how saving, population growth and technological progress affect the level of an economy’s output and growth over time

Question 2

Steady State

Answer 2

At K* the capital stock (k) and output f(k) are steady over time (rather than growing or shrinking)

Question 3

Golden Rule Level of Capital

Answer 3

Steady State value of k that maximizes consumption

Question 4

Demographic Transition

Answer 4

Transition from high birth and death rates to lower birth and death rates as a country develops