Tutorial 4 - Tutorial 4 Q1.) Suppose an economy described...

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Tutorial 4Q1.) Suppose an economy described by the Solow model has the following productionfunction:Y=K1/2(LE)1/2a.For this economy, what isf(k)?b.Use your answer to part (a) to solve for the steady-state value ofyas a functionofs,n,g, andc.Two neighbouring economies have the above production function, but they havedifferent parameter values. Atlantis has a saving rate of 28 percent and a populationgrowth rate of 1 percent per year. Xanadu has a saving rate of 10 percent and apopulation growth rate of 4 percent per year. In both countries,g= 0.02 andδ= 0.04.Find the steady-state value ofyfor each country.Q2.) Prove each of the following statements about the steady state of the Solow model withpopulation growth and technological progress..δ.
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Term
Spring
Professor
Caitlin Flanagan
Tags
Economics, Supply And Demand, Stock and flow, total labour income

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