In expanded form, this formula is:

Y = ( Y / L) * L  (Y / K) * K, (3)

where Y / L - the marginal product of labor MPL, Y / K - the marginal product of capital MPK. This means that the generic product is equal to the sum of products of spent labor and capital to their marginal products, ie Gains products Y from increased labor costs L and capital expenditures K. In simple terms:

y = Y / L, (4)

where y - productivity; k = K / L, where k - capital-labor. Then the production function is of the form:

y= f (k), (5)

where f (k) = F (k,1).]

Graphic representation of this function is as shown in Pic. 2. Moreover, if k is increased by one unit, then y increases by RTO unit. As the capital-labor increases its performance, but with a decreasing rate, as RTO is reduced.  Aggregate demand in the Solow defined investment and consumer demand. The equation of output per worker is:

 = с + i, (6)

where c and i - consumption and investment.

Pic. 2 shows that the capital-labor ratio k determines the amount of output per worker:

y = f (k).

(7)

Pic. 2. - The schedule of the production function in the model Solow per employee

Income is divided between consumption and savings in accordance with the savings rate, so that consumption can be written as

с = (1 — s) y, (8)

where s - savings rate (savings)     

Then y = c + i = (1 - s) y + i, where i = sy. In equilibrium savings and investments are proportional to income.     As a result, the condition of equality of supply and demand can be expressed as:

f (k) = c + i или f (k) = i / s. (9)

The production function determines the supply of goods on the market, and the accumulation of capital - the demand for industrial products. The volume of capital investments is changing under the impact of retirement. Investment per worker are part of the income per worker (i = sy) or

i = s * f(k). (10)

 It follows that the higher the level of capital-labor ratio k, the higher the level of production f (k) and more investment i.     In the model of Robert Solow savings rate - a key factor in determining the level of capital-resistance. A higher savings rate provides a greater margin of capital and a higher level of production

Another factor of sustainable economic growth in a sustainable economy is the growth of the population. For the stability of the economy requires that investment sf (k) to offset the effects of disposals of capital and growth of capital (d + n) k and E(Pic. 3).

sf(k)

Pic. 3. - Investment sf (k) and the growth of capital (d + n) k

However, if population growth is not accompanied by an increase in investment, which leads to a reduction of the capital stock per worker. Thus, if a country with a high population growth rates have lower capital-labor ratio, the means - and lower incomes.     Thus, the higher the savings rate (savings), the higher level of output and the stock of capital can be reached in a state of stable equilibrium. However, the rise in the rate of accumulation leads to higher economic growth in the short term, as long as the economy reaches the point of a new stable equilibrium.     Obviously, neither the process of accumulation, no increase in the savings rate can not explain the mechanism of continuous economic growth. They show only a transition from one state of equilibrium to other .How known in Keynesian models wondered exogenous savings rate and is determined by the equilibrium rate of growth of income. In the neoclassical Solow model at any rate savings market economy tends to correspond to the stable level of the assets (k *) and balanced growth, where income and capital grow at a rate (n + g). The value of the savings rate (savings) is the object of economic policy and is important in assessing the various programs of economic growth.     The above model allows us to describe the mechanism of Solow's long-term economic growth, to maintain balance in the economy and full employment of factors. She identifies technical progress as the sole basis for sustainable prosperity and allows you to find the best option development, ensure maximum consumption. Solow model shows the relationship between savings, capital accumulation and economic growth.

The first type of macroeconomic growth - extensive (Latin Extensivus-growing).      In this case, the increase in production is due to three factors: 1) capital (funds), and 2) the labor force 3) material costs (natural raw materials, energy).     To determine the role of each of these factors in the multiplication output is applied econometrics (a scientific discipline that studies the quantitative trends in the economy).     With the help of econometric models are the growth of the national economy. Solow found that the pattern of growth in the absence of technical progress (that is, with an extensive expansion of production) has the property of constant returns to scale increasing factors:

ZY = F(ZK, ZL, ZN) (11)

This formula expresses the following functional dependence. If capital, labor and material costs increased by an amount Z, then the output will increase in Z time. This property is characteristic of the extensive increase in production: it is directly proportional to the amount spent by the production factors. This relationship is clearly shown in Fig. 4. Extensive growth of production - the simplest and historically the original path of expanded reproduction. It has its advantages. This is - the easiest way to increase the pace of economic development. With it, there is a rapid development of natural resources and can relatively quickly reduce or eliminate unemployment and provide greater employment of labor. Such a way of increasing production and has serious drawbacks. He attaches technical stagnation, in which quantitative increase in production is not accompanied by technical and economic progress.

Pic. 4. - The rate of change in the economic performance of the extensive growth

Since the output is increased to the same extent that it increases the value of assets used, material resources and the number of employees, on the same level are the numerical values ​​of these economic indicators, such as productivity of capital, materials and labor productivity.     Extensive expansion of production in the country requires a sufficient amount of labor and natural resources, the expense of which can increase the scale of the economy. However, this will inevitably worsen the conditions of reproduction.     Thus, more and more aging equipment at existing plants. Due to the increasing depletion of nonrenewable natural resources are spending more and more labor and means of production for production of each ton of raw materials and fuel. As a result of economic growth, increasingly, is expensive in nature. Long-term orientation of the predominantly extensive way of output growth is a national economy to a deadlock. The above problems illustrate that extensive way of economic growth has long been exhausted. It inevitably led to a general decline in production. The way out of this situation is the intensification of reproduction. A more complex type of growth - intensive (Fr. intensif-voltage). Its main distinguishing feature - improving the efficiency of production factors on the basis of technological progress.     In this type of expanded reproduction of a new factor of economic growth - increasing the efficiency of traditional factors. Because of this, the production function is transformed. Its most simple expression is:

Y = AF (К, L, N) (12)

In this formula, A - This is the total factor productivity. The formula shows: If the cost of factors of production does not change, but their overall performance A increases by 1%, the volume of production also increased by 1%. However, in industrialized countries can not be found in its pure form the first or second type of economic growth: they are combined in a certain ratio. Intensive expanded reproduction has a number of features. It is more progressive, as a crucial role in raising the efficiency of the real conditions of production begins to play the new "engine" - the achievements of science and technology. Therefore, the scale of society develops production of scientific and technical information, which ultimately embodied in an increasingly efficient means of production. While improving the cultural and technical level of the workers. With the dramatic increase in production overcome the obstacles of economic growth generated by the known limitations of natural resources. Most beneficial factor in the expansion of production is resource-saving. For example, to save 1 tonne of fuel (7000 kcal) by the use of new technology, requires 3-4 times less expensive than the costs of production of the same amount of fuel. Meanwhile intensification associated with deep progressive restructuring of the economy, the general training initiative and highly professional employees. Features intensive type of expanded reproduction are that it is not possible that the very high rates of economic growth.

However, technological progress can cause unemployment, which increases in labor-surplus regions.  Speaking of the relationship between monetary policy, interest rate and equity market can be said that the monetary policy of the National Bank of the country, as a rule, has 6 main objectives: 1) a high level of employment, 2) growth, 3) price stability, and 4) the stability of interest rates, and 5) the stability of the financial markets, and 6) the stability of the currency market. Deceleration of inflation as a positive result of the activities undertaken, however, has also negative effects on the markets, as well as in manufacturing. The more expensive the loan, the lower the propensity to invest, the harder it is to fund investments, the more slowly growing economy. Therefore, in order to combat inflation does not lead to the suppression of the investment process, the government needs to take care of compensation for such adverse effects in a timely manner by including shock: a reduction in income tax rate, the provision of credit for the payment of a special tax (tax credit), etc. . The most important tool of monetary policy is open market operations (primarily in the securities market).     Open market policy is expressed primarily in the production, sale and redemption of debt by the central bank of the Federal Government and local authorities to commercial banks, the public. In other words, the central bank to regulate the money supply is the buying and selling of government debt.     So, if there is a need to increase the quantity of money in circulation, it is buying up government debt: the owners of government bonds, bought them for, say, 500tg., Sell them to the central bank for 550 tenge. The money for the bond immediately enter into circulation. For example, when in the second half of the 80's. in the U.S. economy there has long climb     Reserve supported its massive purchases of government bonds on the securities market. At that time, both the magnitude of sales of government bonds in this period amounted to only 4.2 billion. a year, their annual purchases accounted for 20 - 30 billion. That resulted from these actions the Fed increased the money supply led to lower interest rates as well as to increase the stock price, which is also stimulated investment activity companies. Open market operations are the most widely practiced by the central banks of those countries where there is a large market of government bonds (U.S., UK, Canada, etc.). Lack of development of the securities market in the country did not allow the central bank to conduct an effective restrictive monetary policy. In these conditions, the share of loans to enterprises and households have to meet the budget deficit turned out insignificant.

The deficit was financed mainly by loans from the central bank, ie through the issue of new money into circulation. But for the period 1995-98. scale purchase of government securities increased so rapidly that the economy began to show intense crowding out.     Thus, if the economy is faced with unemployment and a fall in prices, it is necessary to increase the money supply to stimulate aggregate spending. For this purpose, the purchase of securities by the central bank in the open market, reducing the reserve ratio, reducing the discount rate. This reflects the policy of cheap money, which aims - to make credit cheaper and affordable. If excessive total cost pushing the economy to an inflationary spiral, the realized return dear money policy. Actively selling government securities on the open market to the population and rapidly expanding supply, the central bank thus lowers the market price, which is identical raising interest rates, earnings yields, attracting potential customers. Population and banks are beginning to buy government bonds, which will inevitably reduce the money supply. The first and second instruments of monetary policy include the mechanisms of indirect effects, involving the central bank, and other elements of the banking system. Using a third tool, the central bank is right, directly affect the money supply. Therefore, open market operations are the most high-speed means of regulating the money supply. Reserve the same rate and the discount rate is strategic rather than tactical. They not only have great practical value, but also provide unique information effect, which consists in the fact that commercial interests have on the content and direction of monetary policy, in a relatively long term.     Keynesians believe that the main instrument to regulate the money supply is the discount rate. However, current conditions are likely to be recognized open market operations. The refinancing rate is less significant, since amount of money received by commercial banks at the central bank is usually small (usually purchased in this way 2-3% credit). Moreover, it is often open market operations encourage commercial banks to borrow from the central bank: intensive sale of bonds by the central bank may face a shortage of funds from commercial banks to buy them. The smaller the role of changes in reserve requirements due to the fact that in reserve money is not earning interest, and therefore increased reserve requirements have a negative impact on the profits of banks. The result is obvious or hidden desire to quit over the last central bank, which weakens the regulatory capacity of monetary policy. The primary role of open market operations by the fact that this instrument has the advantage of scalability and flexibility: government securities can be bought and sold quickly and in large quantities. Thus, the U.S. banks that make up the Federal Reserve System, owned by government bonds by about $ 250 billion, the sale of which could theoretically reduce the funds of commercial banks to zero.     So, from the above it is clear that for the consideration of the securities market, you must first consider issues such as the relationship of monetary policy, interest rates and securities, as economic growth and its types. And the economic growth of Kazakhstan, in turn, is directly linked to the development of the securities.