Economics: Other Economics Problems – #29405


Question: Discuss whether the following statements are true or false.

(a) The Harrod-Domar model states that a country’s per capita growth rate depends on its rate of savings, whereas the Solow model states that it does not.

(b) According to the Harrod-Domar model, if the capital-output ratio in a country is high, that country will grow faster.

(c) To understand if there is convergence in the world economy, we must study countries that are currently rich.

(d) In the Solow model, a change in the population growth rate has no effect on the long-run rate of per capita growth.

(e) In the Solow model, output per head goes down as capital per head increases because of diminishing returns.

(f) The key insight of new growth theory is that knowledge creation generates positive externalities and therefore increasing returns to human capital.

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