Gce Model Questions Vol1 2024 Economics Question 48
Practice objective / multiple choice question 48 from the 2024 Gce Model Questions Vol1 Economics examination.
In the Solow growth model the production function per worker is \(y = k^{0.5}\). The economy has a savings rate \(s = 0.25\), depreciation \(\delta = 0.05\), population growth \(n = 0.02\) and technological progress \(g = 0.01\).\ (a) Compute the steady‑state capital per worker \(k^{*}\) and the corresponding steady‑state output per worker \(y^{*}\).\ (b) By how many percentage points must the savings rate be increased to raise the steady‑state output per worker by 20 %?
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This is Gce Model Questions Vol1 2024 Economics Question 48. It is one of the objective questions from the 2024 Gce Model Questions Vol1 Economics examination.
Difficulty level: Hard .
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