The image above depicts the Solow Growth Model. We can use this model to determine how the steady-state level of capital stock and output respond to different changes.
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 image above depicts the Solow Growth Model. We can use this model to determine how the steady-state level of capital stock and output respond to different changes.
What is the new steady-state level of capital stock and the new steady-state level of output if we increase the depreciation rate from 0.02 to 0.03?
K* = b0g0iQ1whKk=
Y* = Pz2PEfhsNWI=