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Growth rate of standard of living in the new steady state

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1. Consider the Solow model with exogenous growth. Assume that because of global warming the depreciation rate increases. Illustrate the change in the steady state. What happens to the growth rate of standard of living in the new steady state?

2. Suppose the government of a small open economy passes an investment tax exemption to stimulate investment. Using the classical open economy model, what will the effects of this investment tax exemption?

3. Suppose a government decides to increase taxes Using the long-run model of the economy, graphically illustrate the impact of on GDP. Be sure to label the axes, the curves, the initial equilibrium values, the direction curves shift, and the terminal equilibrium values.

Reference no: EM132601314

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