Long-run economic growth

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Question I. The following question is about the long-run economic growth. a) b) Consider the following equation of the neoclassical (Solow—Swan) growth model:NC = sf (k) — (6 + n)k . Explain in words what you understand by this equation and represent it on a diagram. Assume that a large portion of the capital stock in a country has been destroyed due to a war. Show, using the diagram, how this country can grow over time and reach thesteady state, even in the absence of technical progress. In answering this question,assume that the saving rate and population remain constant. Suggest slome government policies that would foster economic growth. Justify yoursuggestions based on the growth models covered in this course.

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