QUESTION SEVEN Consider the production function of the Solow grow model as Y=F (K, L) = K0.5 10.5 with the assumptions o

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Question Seven Consider The Production Function Of The Solow Grow Model As Y F K L K0 5 10 5 With The Assumptions O 1 (83.99 KiB) Viewed 66 times

QUESTION SEVEN Consider the production function of the Solow grow model as Y=F (K, L) = K0.5 10.5 with the assumptions of the model holding, There is no effectiveness of labor which may enter the production function multiplicatively with labor L. a) Show that the intensive form of the production function is y = √k .[4] b) Show that the fundamental equation of the Solow model is k = sf (k) - (8+n)k, where the notations have usual meanings. [4] c) Obtain the expressions for k*, y* and c* as functions of 8, s,n and g. [4] d) Define the term "golden rule" and obtain the golden rule for the Solow model. [4] e) What are some of the reasons why the Solow model is considered to be weak? [4]