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FA25 ECON 302 002 Midterm 2

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In the Solow model with no population growth (i.e., L is fixed), a rise in the saving rate leads to a higher steady-state capital stock, and a rise in the depreciation rate leads to a lower steady-state capital stock.

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Question restatement: In the Solow model with no population growth (L is fixed), a rise in the saving rate leads to a higher steady-state capital stock, and a rise in the depreciation rate leads to a lower steady-state capital stock. Option 1: the saving rate This statement is true. In the Solow model, the steady-state condition is s f(k*) ......Login to view full explanation

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