0.4 In the Solow growth model, suppose that the per-worker production function is given by y=zk with s= 0.15, d =0.1, and n = 0.02. a. Suppose in country A that z = 1. Calculate the steady-state capital per worker and income per capita in country A. The steady-state capital per worker is. (Round to two decimal places as needed.) The steady-state income per capita is (Round to two decimal places as needed.) b. Suppose in country B that z = 2. Calculate the steady-state capital per worker and income per capita in country B. The steady-state capital per worker is (Round to two decimal places as needed.) The steady-state income per capita is (Round to two decimal places as needed.) c. As measured by GDP per capita, how much richer is country B than country A? What does this tell us about the potential differences in total factor productivity to explain differences in standards of living across countries? Country B is times richer than country A, as measured by GDP per capita. This shows that differences in total factor productivity are proportional differences in income per capita since the steady-state income per capita is from country A to country B. (Round to two decimal places as needed.)

0.4 In the Solow growth model, suppose that the per-worker production function is given by y=zk with s= 0.15, d =0.1, and n = 0.02. a. Suppose in country A that z = 1. Calculate the steady-state capital per worker and income per capita in country A. The steady-state capital per worker is. (Round to two decimal places as needed.) The steady-state income per capita is (Round to two decimal places as needed.) b. Suppose in country B that z = 2. Calculate the steady-state capital per worker and income per capita in country B. The steady-state capital per worker is (Round to two decimal places as needed.) The steady-state income per capita is (Round to two decimal places as needed.) c. As measured by GDP per capita, how much richer is country B than country A? What does this tell us about the potential differences in total factor productivity to explain differences in standards of living across countries? Country B is times richer than country A, as measured by GDP per capita. This shows that differences in total factor productivity are proportional differences in income per capita since the steady-state income per capita is from country A to country B. (Round to two decimal places as needed.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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