Worth: Mankiw Economics 5e CHAPTER 7 Economic Growth I 181 table 7-1 International Differences in the Standard of Living: 1999 Income per Person Income per Person United States s31,910 China 3,550 Indonesia 23.510 India 2.230 8,070 Pakistan Bangladesh Brazil 70 Source: World bank echnological progress affect the level of an economy's output and its growth over time. In this chapter we analyze the roles of saving and population rowth. In the next chapter we introduce technological progress 7-1 The Accumulation of Capital The Solow growth model is designed to show how growth in the capital stock, growth in the labor force, and advances in technology interact in an economy, d how they affect a nations total output of goods and services. We build this nodel in steps. Our first step is to examine how the supply and demand for goods determine the accumulation of capital. In this first step, we assume that the labor force and technology are fixed. We then relax these assumptions by intro- ducing changes in the labor force later in this chapter and by introducing The Supply and Demand for Goods The supply and demand for goods played a central role in our static model of the closed economy in Chapter 3. The same is true for the Solow model By consid- ering the supply and demand for goods, we can see what determines how much output is produced at any given time and how this output is allocated among al- ternative uses The Solow growth model is named after economist Robert Solow and was developed in the 1950s and 1960s. In 1987 Solow won the Nobel Prize in economics for his work growth. The model was introduced in Robert M. Solow,"A Contribution to the Theory of Eco- nomic Growth, "Quarterly Journal of Economics(February 1956): 65-94 User JoENA: Job EFFo1423:6264_cho7: Pg 181: 26798#/eps at 100s ed,Feb13,20029:484MUser JOEWA:Job EFF01423:6264_ch07:Pg 181:26798#/eps at 100% *26798* Wed, Feb 13, 2002 9:48 AM technological progress affect the level of an economy’s output and its growth over time. In this chapter we analyze the roles of saving and population growth. In the next chapter we introduce technological progress.1 7-1 The Accumulation of Capital The Solow growth model is designed to show how growth in the capital stock, growth in the labor force, and advances in technology interact in an economy, and how they affect a nation’s total output of goods and services.We build this model in steps. Our first step is to examine how the supply and demand for goods determine the accumulation of capital. In this first step, we assume that the labor force and technology are fixed.We then relax these assumptions by intro￾ducing changes in the labor force later in this chapter and by introducing changes in technology in the next. The Supply and Demand for Goods The supply and demand for goods played a central role in our static model of the closed economy in Chapter 3.The same is true for the Solow model. By consid￾ering the supply and demand for goods, we can see what determines how much output is produced at any given time and how this output is allocated among al￾ternative uses. CHAPTER 7 Economic Growth I | 181 1 The Solow growth model is named after economist Robert Solow and was developed in the 1950s and 1960s. In 1987 Solow won the Nobel Prize in economics for his work in economic growth.The model was introduced in Robert M. Solow, “A Contribution to the Theory of Eco￾nomic Growth,’’ Quarterly Journal of Economics (February 1956): 65–94. Income per Person Income per Person Country (in U.S. dollars) Country (in U.S. dollars) United States $31,910 China 3,550 Japan 25,170 Indonesia 2,660 Germany 23,510 India 2,230 Mexico 8,070 Pakistan 1,860 Russia 6,990 Bangladesh 1,530 Brazil 6,840 Nigeria 770 Source: World Bank. International Differences in the Standard of Living: 1999 table 7-1