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ECON 2400
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Chapter 7 Economic Growth Malthus and Solow 2 The Malthusian Model a Production Determined by Labour and Fixed Land Supply b Population Growth and per Capita Consumption c SteadyState Consumption and Population i Effects of Technological Change ii Effects of Population Control d Malthus Theory and Evidence3 Solows Model of Exogenous Growth a The Representative Consumer b The Representative Firm c Competitive Equilibrium d SteadyState Growth i The SteadyState Path ii Adjustment Towards Equilibrium e Savings and Growth i Equilibrium Effects MPnd ii The Golden Rule Kf Labour Force Growth and Output per Worker g Total Factor Productivity and Output per Worker4 Growth Accounting a Solow Residuals b The Productivity Slowdown i Measurement of Services ii The Relative Price of Energy iii Costs of Adopting New Technology c Cyclical Properties of Solow Residuals d Growth Accounting Exercise TEXTBOOK QUESTION SOLUTIONSProblems1 The amount of land increases and at first the size of the population is unchanged Therefore consumption per worker increases However the increase in consumption per worker increases the population growth rateIn the steady state neitherc norl are affected by the initial increase in land This fact can be discerned by noting that there will be no changes in either of the panels of Figure 68 in the textbook This figure is also reproduced as Figure 71 belowCopyright2013 Pearson Canada Inc75Instructors Manual for Macroeconomics Fourth Canadian Edition Figure 712 A reduction in the death rate increases the number of survivors from the current period who will still be living in the future Therefore such a technological change in public health shifts the functiongc upward In Problem 1 there were no effects on the levels of land per worker and consumption per worker In this case the gc function in the bottom panel of Figure 72 shifts upward Equilibrium consumption per worker decreases From the top panel of Figure 72 we also see that the decrease in consumption per worker requires a reduction in the equilibrium level of land per worker The size of the population has increased but the amount of available land is unchangedCopyright2013 Pearson Canada Inc76
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