Macro Quiz 10

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