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Please answer this question using the assumptions from the Solow Model In a country, the production function in terms of output per capita, y, and capital per labor, k, is y = k(12) The fraction of output saved, s, is 25% and the depreciation rate, δ, is 0.05. Assume that the population does not grow. What is the steady-state of capital per worker, k*, and output per worker, y*? What happens to the steady-state values if the population growth rate rises to 5%? By how much would the country have to increase its savings rate in b) in order to reach the same levels of steady-state values as in a)? Does the country’s growth rate increase in c) compared to a)? how?

Please answer this question using the assumptions from the Solow Model In a country, the production function in terms of output per capita, y, and capital per labor, k, is y = k(12) The fraction of output saved, s, is 25% and the depreciation rate, δ, is 0.05. Assume that the population does not grow. What is the steady-state of capital per worker, k*, and output per worker, y*? What happens to the steady-state values if the population growth rate rises to 5%? By how much would the country have to increase its savings rate in b) in order to reach the same levels of steady-state values as in a)? Does the country’s growth rate increase in c) compared to a)? how?

MATLAB: An Introduction with Applications
MATLAB: An Introduction with Applications
6th Edition
ISBN:9781119256830
Author:Amos Gilat
Publisher:Amos Gilat
Chapter1: Starting With Matlab
Section: Chapter Questions
Problem 1P
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Please answer this question using the assumptions from the Solow Model

In a country, the production function in terms of output per capita, y, and capital per labor, k, is y = k(12)

The fraction of output saved, s, is 25% and the depreciation rate, δ, is 0.05. Assume that the population does not grow.

  1. What is the steady-state of capital per worker, k*, and output per worker, y*?
  2. What happens to the steady-state values if the population growth rate rises to 5%?
  3. By how much would the country have to increase its savings rate in b) in order to reach the same levels of steady-state values as in a)?
  4. Does the country’s growth rate increase in c) compared to a)? how?

 

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