New Office Hours on Solow model and steady state

BY Mary Clare Peate ON Wed, April 20, 2016

The Solow model is a great way to examine the inputs to economic growth. But the practice questions can be, well, tough! If you’re stumped, you’re not alone.

Since we’re about halfway through our series on the Solow model, I wanted to address a couple of your questions before we move onto our next topic.

Let's tackle the following questions together:

Country A has K=10,000 and produces GDP according to the following equation: GDP=5√K.

1) If the country devotes 25% of its GDP to making investment goods, how much is the country investing?

2) If 1% of all machines become worthless every year (they depreciate, in other words) in Country A, GDP is...?

Check out Marginal Revolution University's new Office Hours video and let me know what you think. Or, submit a different question and we just may cover it next time!


Mary Clare Peate
Instructional Designer
Marginal Revolution University