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Consider two economies, A and B, that are identical except that economy A has a higher population growth rate than economy B. Absent any technological progress, is the long run level of per capita income in economy A higher than that in economy B according to the Solow model? Explain. (If you draw a figure, label the axes and ALL curves clearly. A figure without labels will only fetch minimum credit).
According to the Solow-Swan growth model, in the steady state the country with the higher population growth rate will have a _lower__ level of total output and _the same__ rate of growth of output per worker as/than the country with the lower population growth rate.
b. Discuss (NOT just answer “true” or “false”) whether the following statement is true or false: In the Solow model without technological progress, an increase in saving rate has effect on the long-run rate of per capita output.