Answer

Solution

1. 1

   With $\delta=0$, the capital accumulation equation per worker is

2. 2
   $$\dot k = sf(k)-nk,\qquad \frac{\dot k}{k}=s\,\frac{f(k)}{k}-n=\frac{s}{\sqrt{k}}-n.$$
3. 3

   At the steady state $k^{*}=50$: $\dfrac{s}{\sqrt{50}}=n\Rightarrow s=n\sqrt{50}$.

4. 4

   At the current level $k=2$:

5. 5
   $$\frac{\dot k}{k}=\frac{n\sqrt{50}}{\sqrt{2}}-n=n\sqrt{25}-n=5n-n=4n.$$
6. 6

   Since $y=k^{1/2}$, $\dfrac{\dot y}{y}=\dfrac{1}{2}\cdot\dfrac{\dot k}{k}=2n$.

7. 7

   This value is not equal to $24n$, $25n$, or $0.3$ (the last is not even of the form $\cdot n$). Hence the correct option is `None of the previous options'.

Answer structure / marking notes

Content note