Answered>Order 4451

Concerning the distinction between a level effect versus a growth effect, which parameter (s) below in the Solow Model affects the growth rate of output per unit of effective labor, y, but does not affect the growth rate of output per worker on the balanced growth path? Other parameters have level effects and by definition, change the economy’s balanced growth path and thus the level of output per worker at any point in time.

a.    The savings rate, s; the population growth rate, n; the growth rate in technological progress and knowledge, g; and the rate of depreciation of physical capital, delta.

b.    The population growth rate, n; the growth rate in technological progress and knowledge, g ; and the rate of depreciation of physical capital delta.

c.    The growth rate in technological progress and knowledge, g;

d.    The rate of depreciation of physical capital, delta