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Chapter 7

MGEB06H3 Chapter Notes - Chapter 7: Golden Rule, Production Function, Michael Kremer


Department
Economics for Management Studies
Course Code
MGEB06H3
Professor
Iris Au
Chapter
7

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Chapter 7

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Parte
-Growth Theory :The economy in The Very
LK
Theory of econ Growth :Solow growth model
show how growth in A. K,Laffect Total Y
A:Technological Growth
Ytygn .
(k:savings ork Capital stock Growth
L:population growth
The Accumulation of K
¥#
C
II )
=
Supply {Demand for goods :determine The K
Solow assumes production function has
conrlantretumtoscalel
>ZY
=F( zk ,
ZL )Zis positive #
all econ .Variables relative To Lsize
¥= HE ,1) th
-
output per worker tether mattifier

Only pages 1-3 are available for preview. Some parts have been intentionally blurred.

Y
=¥output per worker
k=
¥capital per worker
production function :
y= f(k)
*k,1)
slope of this function :
MPk= f#1) -f(k)how much extra Output aworker
produces When Hunit of Capital
diminishing marginal product of capital
#becomes flatter as K't .
The Demand for Goods 4Consumption Function
-Demand forgoods in Solow Is from C{ICD
per worker :
y
=cti
ft
statements
,
game
as c
(
>y= (I-ay to i=sy
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