Question

The balanced growth path Consider a Solow economy that is on its balanced growth path. Assume for simplicity that there is no technological progress. Now suppose that the rate of population?

Answer 1

The balanced growth path refers to a state in which an economy is experiencing steady and sustainable economic growth without any technological progress, and the rate of population growth is equal to the rate of technological progress.

Step-by-step explanation:

The balanced growth path refers to a state in which an economy is experiencing steady and sustainable economic growth without any technological progress. It is characterized by a constant rate of population growth, among other factors. On the balanced growth path, the rate of population growth is equal to the rate of technological progress, resulting in stable economic conditions.

For example, if an economy starts with a GDP per capita of 100 and the rate of population growth is 3%, the GDP at a future date can be calculated as follows: 100 x (1 + 0.03) years.

It is important to note that the balanced growth path assumes no external shocks or changes in economic conditions that could disrupt this equilibrium.