Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:) The goal is to analyze further the two-sector endogenous growth model.
Write down the equation of motion for k, which shows delta k as saving minus break-even
investment. (Break-even investment is the amount of investment needed to keep capital per
effective worker constant.) Draw a graph that determines the steady-state k. In this
economy, what's the steady-state growth rate of output per work? How do the saving rate
and fraction of labor force in universities (u) affect this steady-state growth rate?
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