Macro Quiz 10
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in solow's model of economic growth, suppose that s represents the savings rate, z represents total factor productivity, k represents the level of capital per worker, f(k) represents the per-worker production function. Also suppose that n represents the population growth rate and d represents the depreciation rate of capital. the equilibrium level of capital per worker k*, will satisfy the equation
szf(k*)=(n+d)k*
In the slow growth model, the law of motion of capital takes into account
the depreciation of old capital
In solow's exogenous growth model, the economy reaches a stable steady state because
the marginal return of capital is decreasing
