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Consider the Malthusian model, with an exogenous birth rate, b, and a death rate, d, that...

Consider the Malthusian model, with an exogenous birth rate, b, and a death rate, d, that is a decreasing function of per capita income. Suppose there is an innovation in medicine such that, evaluated at each level of per capita income, the death rate now would be lower than otherwise. Assume this “shift down” in the death rate function is a permanent change. Assume that before the economy was at its long-run steady state equilibrium. Compare the economy’s new long-run steady state to its steady state prior to this change. How do the steady-state birth rate, death rate, per capita income, population, and total income compare between the old and new steady states? Support your answers graphically. During the transition between the old and new steady states, are the growth rates in population, per capita income, and total income positive, negative, or zero?

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