ECON 2450 Study Guide - Midterm Guide: Chlordiazepoxide, Production Function, Ricardian Equivalence
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Sample midterm: consider the malthusian model of economic growth. Total output (food) is produced according to a cobb-douglas aggregate production function, Yt = zl n 1 t where < 1, z is tfp, l is a xed factor (land), and n is labour. Assume that labour evolves over time according to, Nt is the gross population growth rate that is an increasing function of where < 1. Nt current consumption per worker, and c is aggregate consumption. All goods produced are used only for consumption. Denote per worker quantities by lower case letters: y = y. N . (a) express the population growth dynamics in terms of land per worker in equilibrium. The labor force grows at an exogenous rate n per period. This economy saves a constant fraction of its income s, and consumes the rest. Capital per worker evolves according to the following law of motion, (1 + n)kt+1 = kt + syt kt (2)
