Explain what happens to the economy over time

Reference no: EM132198007

Question: Consider a one time change in govemment policy that immediately and permanently increases the level of the labor force in an economy (such as a more generous immigration policy). In particular, suppose it rises permanently from Z to L'. Assuming the economy starts in its initial steady state, use the Solow model to explain what happens to the economy over time and in the long run. In particular, comment on what happens to the level and growth rate of per capita GDP.

Reference no: EM132198007

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