Question

If an economy moves from a steady state with positive population growth to a zero population growth rate, then in the new steady state, total output growth will be ______, and growth of output per person will be ______.

Answer 1

lower; the same as it was before

Step-by-step explanation:

If an economy moves from a steady state with positive population growth to a zero population growth rate, then in the new steady state, total output growth will be lower, and growth of output per person will be the same as it was before.

Answer 2

Answer: lower; the same as it was before

Explanation: The Solow Growth Model is an economic growth model that analyzes the changes in the level of output in an economy over time as a result of changes in population. It assumes that permanent growth is only achievable through technological progress and that shifts in saving and in population growth only cause level effects in the long-run. The total output growth will be lower, and the growth of output per person will be the same as before in an economy that moves from a positive population growth to zero population growth rate (all in the steady state). This is because with positive growth, total output has been on the rise, this becomes lower than what it were if population growth was to go to zero and individuals whether in a growing population or not only have limited number of output they can provide, so this remains unchanged.