Ans. The change in capital stock in the solow model is given by: a. Δ k = σ f ( k ) − δ k.The Solow Model implies that countries with small initial capital stocks should grow rapidly. As the capital stock increases, the growth rate of capital stock will fall till it reaches the steady state. Think of this like parking a car in a parking spot. It's a model that accounts for catching up growth, due to capital accumulation, and cutting edge growth, due to the buildup of ideas. Output and capital per worker grow at the same constant, positive rate in BGP of model. In long run model reaches BGP. 2. The Solow Model looks at longrun economic growth using a mathematical model.

Capital Stock In Solow Model In Montgomery

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