Econ 496: Economic Growth and Development
September 15, 2004
D. Andolfatto
Name
Instructions. Answer the question in the space provided (do not write on the back of the exam paper).
Make sure to label all diagrams clearly.
1. Consider the steady state of the Malthusian growth model with population N ∗ and per capita income
y ∗ . Imagine now, that for some unexplained reason, the birth rate falls from bH to bL . With the aid of
a diagram, demonstrate the population and income dynamics that follow from such a ‘shock.’ As well,
try to explain (i.e., provide economic intuition) what is going on in plain English.
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