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[An increase in the productivity of research.] Suppose, there is a onetime increase in the
productivity of research Θ (theta), as in the Figure 5.1 (in textbook, Jones’). What will
happen to the level of technology, A and the growth rate overtime?
Show how the Romer model exhibits a scale effect in levels, that is, a larger economy will
be a richer economy. Give the demand and supply effects. Explain the two opposing effects
of SR on per capita output.
Prove that in the Romer model, the long run growth rate of the economy is determined by
the parameters of the production function for ideas and the rate of growth for researchers
which is ultimately given by the population growth rate. (Romer Model)
The Production of new goods, or new ideas, requires the possibility of earning profits and
therefore necessitates a move away from perfect competition. Explain this in the context of
Romer model
Explain the two characteristics of Public goods; a) Non-rivalrous and b) low degree of
excludability. How does the Idea behave like a public goods? Explain the problems
associated with the nature of Data on Ideas. (Romer Model)
“Among countries that have the same steady state, the convergence hypothesis should hold:
poor countries should grow faster on average than rich countries”. Explain with graphs and
examples. (Romer Model)
Explain why an increase in saving in the Solow model has a level effect but not a growth
effect.
A) Discuss the steady state condition in the Solow model with population growth and no
technological progress.
B) In the Solow model with no population growth and no
technological progress, explain the golden rule level of consumption. Use a diagram to
discuss your answer.
C) When it would be possible to increase output per unit of labour
even at the steady state? Discuss.
What constitutes the knife-edge instability problem in the Harrod model? Give a formal
proof and illustrate with an example.
As of September 2021, the population (16+ years of age) in the U.S. is 263
million people. The labor force participation rate is 61%, and the unemployment rate
is 4.8%. What is the employment level?
