Question

Q2: Transition dynamics 2.1 Describe what the process of transition dynamics involves. (5) 2.2 Explain why the speed of the transition changes as the growth process unfolds, and how this relates to our understanding of differences in growth rates between countries? (5) I Q3: The steady state 3.1 How would you define the general steady-state position ($K^$ and $Y^$) and its implications for change in key variables such as consumption and output per person? (5) 3.2 Briefly describe what the Golden Rule level of saving is within the context of the Solow model, and write down the relevant algebraic conditions to support your answer. (5) Q4: Investment and depreciation 4.1 Referring to the system of equations describing the Solow model, show how net investment is determined in the Solow model, and how it is linked to growth (during the transition dynamics phase)? (5) 4.2 Using the given Solow diagram as a starting point, show how a drop in the savings rate would impact on the long-run steady-state position of the economy. (5)

          Q2: Transition dynamics
2.1 Describe what the process of transition dynamics involves. (5)
2.2 Explain why the speed of the transition changes as the growth process unfolds, and how this relates to our understanding of differences in growth rates between countries? (5)
I
Q3: The steady state
3.1 How would you define the general steady-state position ($K^*$ and $Y^*$) and its implications for change in key variables such as consumption and output per person? (5)
3.2 Briefly describe what the Golden Rule level of saving is within the context of the Solow model, and write down the relevant algebraic conditions to support your answer. (5)
Q4: Investment and depreciation
4.1 Referring to the system of equations describing the Solow model, show how net investment is determined in the Solow model, and how it is linked to growth (during the transition dynamics phase)? (5)
4.2 Using the given Solow diagram as a starting point, show how a drop in the savings rate would impact on the long-run steady-state position of the economy. (5)

Q2: Transition dynamics
2.1 Describe what the process of transition dynamics involves. (5)
2.2 Explain why the speed of the transition changes as the growth process unfolds, and how this relates to our understanding of differences in growth rates between countries? (5)
I
Q3: The steady state
3.1 How would you define the general steady-state position (K^* and Y^*) and its implications for change in key variables such as consumption and output per person? (5)
3.2 Briefly describe what the Golden Rule level of saving is within the context of the Solow model, and write down the relevant algebraic conditions to support your answer. (5)
Q4: Investment and depreciation
4.1 Referring to the system of equations describing the Solow model, show how net investment is determined in the Solow model, and how it is linked to growth (during the transition dynamics phase)? (5)
4.2 Using the given Solow diagram as a starting point, show how a drop in the savings rate would impact on the long-run steady-state position of the economy. (5)

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