(Long Run)The country of Prosperous has:Production function: Y = 2K1/2 (AN)1/2 ; where Y=output;K=capital; A=technology; and N=laborSaving rate (s): 20% per yearDepreciation rate (d): 10% per yearLabor growth rate (n): 2% per yearRate of technological change (g): 8% per yearc. Calculate the growth rate of the following variables when the economy achieves its steady-state:Output per effective worker (Y/AN)Output per worker (Y/N)Output (Y)

We are going to derive the expressions for Y/AN and Y/N to answer these questions.

Answered: (Long Run) The country of Prosperous…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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(Long Run)

The country of Prosperous has:

Production function: Y = 2K^1/2 (AN)^1/2; where Y=output;K=capital; A=technology; and N=labor
Saving rate (s): 20% per year
Depreciation rate (d): 10% per year
Labor growth rate (n): 2% per year
Rate of technological change (g): 8% per year

c. Calculate the growth rate of the following variables when the economy achieves its steady-state:

Output per effective worker (Y/AN)
Output per worker (Y/N)
Output (Y)

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