1 Introduction to Macroeconomics
2 Measuring the Macroeconomy
3 An Overview of Long-Run Economic Growth
4 A Model of Production
5 The Solow Growth Model
6 Growth and Ideas
7 The Labor Market, Wages, and Unemployment
8 Inflation
9 An Overview of the Short-Run Model
10 The IS Curve
11 Monetary Policy and the Phillips Curve
12 Stabilization Policy and the AS/AD Framework
13 The Global Financial Crisis: Overview
14 The Global Financial Crisis and the Short-Run Model
15 The Government and the Macroeconomy
16 International Trade
17 Exchange Rates and International Finance
18 Parting Thoughts

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Chapter 5: The Solow Growth Model

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Review Questions

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    What is the mechanism in the Solow model that generates growth? Why is this an appealing
    mechanism? Why does it fail to deliver economic growth in the long run?

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    Add another line, period 6, to Table 5.1. What are the values of

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    What is the economic meaning of the vertical gap between the investment curve and the depreciation curve in the Solow diagram?

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    What is the solution of the Solow model for consumption per person in the steady state, c* = C*/L*? How does each parameter in the solution affect c*, and why?

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    The Solow model implies that differences in total factor productivity are even more important in explaining differences in income across countries than the production model of Chapter 4 suggested. Why?

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    What determines whether a curve shifts in the Solow diagram? Make a list of the parameters of the Solow model, and state whether a change in each parameter shifts a curve (which one?) or is simply a movement along both curves.

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    What is the principle of transition dynamics? Why does the Solow model lead to this principle, and why is it useful?




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