1+n1464(1 – a)kę 1 B kt+1 A- a, + where n denotes the (net) growth rate of population, B/(1+B) denotes the saving rate,

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1 N1464 1 A Ke 1 B Kt 1 A A Where N Denotes The Net Growth Rate Of Population B 1 B Denotes The Saving Rate 1 (64.04 KiB) Viewed 38 times

1+n1464(1 – a)kę 1 B kt+1 A- a, + where n denotes the (net) growth rate of population, B/(1+B) denotes the saving rate, A denotes the productivity level of the production function, and a denotes the capital share. Now, suppose that ko = 1. We will explore how the changes in the parameters affect the value of kn. To fix the idea, consider the following parameter values: n = 0.1, B/(1+B) = 0.45, A = 1, and a = 1/3. Q1. Suppose that only the growth rate of population increases from n = 0.1 to n = 0.2. What is the effect on k ? Specifically, is k, increased? Q2. Explain the intuition of the result in Q1. Q3. Suppose that only the saving rate increases from B/(1+B) = 0.45 to B/(1+B) = 0.5. What is the effect on kį? Specifically, is k, increased? Q4. Explain the intuition of the result in Q3. Q5. Suppose that only the productivity level increases from A = 1 to A = 2. What is the effect on kį? Specifically, is k, increased? 06. Explain the intuition of the result in QS. 07. Suppose that only the capital share increases from a = 0.33 to a = 0.4. What is the effect on kį? Specifically, is k, increased?