Models

Question 1

Malthusian Model

Answer 1

Any increase in TFP will cause a temporary increase in income per capita, but the population will grow or fall until income per capita reaches the steady state.

Question 2

Cases Supporting Malthusian Model

Answer 2

The Black Death - Western Europe
The Great Potato Famine in Ireland

Question 3

Cases Opposing Malthusian Model

Answer 3

The Black Death - Eastern Europe
The conquest of Mexico
Antonine plague in the Rome Empire

Question 4

Domar Model

Question 5

Solow Model

Answer 5

Assumed that a fraction s of income is saved. In the simplest model Aj and Hj are fixed and savings adds
to the stock of physical capital which can now change over time.

Question 6

Solow Model Production Model

Answer 6

Yt = AKt^α (HL)1−α

Question 7

Yt (Solow)

Answer 7

output

Question 8

A (Solow)

Answer 8

Total Factor Productivity (TFP)

Question 9

K (Solow)

Answer 9

capital

Question 10

α (Solow)

Answer 10

the share of capital in output

Question 11

Law of Motion of Capital (Solow)

Answer 11

Kt+1 = sYt + (1 − δ)Kt

Question 12

Increases income per Capita (Solow)

Answer 12

Higher savings rate, TFP, and effective labor

Question 13

Decreases income per Capita (Solow)

Answer 13

Higher rate of depreciation

Question 14

Savings and Property Rights Budget Constraint

Answer 14

C0 = I − S and C1 = (1 + r )S

Question 15

Production Function

Answer 15

Yj = AjKj^ α(HjLj)^1-α