More Related Content More from Gale Pooley (20) Ed213. Quiz
1.What 4 factors are in the HDI?
2.Why would you use the log of a value instead
of the value itself?
3.Why would you use the geometric mean
instead of the arithmetic mean?
14. Y = Output
A = Ideas
K = Capital
e = education
L = Labor
Y = F(A, K, eL)
Solow Model
15. Y = F(A, K, eL)
Simplify to analyze
Assume A , e and L don’t change
don’t change = hold constant
Y = F(K)
Solow Model
16. Y = F(K)
Output is a function of Capital
Assume that the function increases at a
decreasing rate
Diminishing Returns
Solow Model
21. How much output do you
get out of the next
addition of capital?
Diminishing
Marginal Product of Capital
22. Can poor catch up?
Capital Per Worker
Output
Per
Worker
Big
Gain
Little
Gain
Maybe?
26. Solow Growth Model
Y = √K
S = I = s√K
D = dk
Capital K
Y
Output Steady State
D = S = I
Consumption
27. K = 100
s = .30 or 30%
d = .025 or 2.5%
Y = ?
S = ?
D = ?
Consumption = ?
Quiz