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Topics:

1-Capital’s Role in Production

Lecture


2-The Role of Population in Economic Growth


Lecture


3-The Effect of Human Capital on Growth


Lecture


4-Measuring Productivity Growth Across Countries & Technology and Productivity

Essay Questions: Please answer BOTH of the following essay questions.

1. (25 points) Imagine that one of the long-run effects of the current

COVID-19 pandemic is to make people more conservative such that their

savings rates increase.

A. Using the Solow model, describe what the short and long-run impacts

of this change are? Does consumption go up or down in the short

and long-runs? What happens to the capital stock per person? What

happens to growth rate of output per capita in the short and long-runs?

B. Now assume that an additional effect of the pandemic is that the population growth rate also increases. How does this impact your previous

answer?

2. (25 points) Imagine that the world is now described by the Malthusian

Model.

A. What are the assumptions that make the world Malthusian (rather

than being described by the Solow Model)?

B. What is the effect of a pandemic, such as the Black Death or COVID-

19, in the short and long-runs in the Malthusian model? Assume the

diseases do not permanently impact health|they just kill a bunch of

people quickly and the survivors are left the same as before.

C. Now assume that, similar to Question 1, the fertility rate increases as

a result of the pandemic. How does this change your answer to part

B?

Answer

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