Sonoma State UniversityDepartment of EconomicsECONOMICS 304Florence BouvetAssignment 3-Chapters 7-8Due in class onOctober14ththe beginning of classPlease tum in your answers on a separate page.1) Country A and country Bboth have the production function: Y=F(K,L)=K1I3L2I3.Assume for both countries that populations are growing atthe rate of 3percent eachyear, that there isno technological progress, and that 7percent of capital depreciateseach year. Assume further that country A saves 20 percent of output each year andcountry Bsaves 30percent of output each year.a) Compute the "per-worker" form of the production function above.b) Using this and the steady-state condition thatconsiders population growth,compute the steady-state level of capital per worker foreach country.c) Now compute the steady state level of consumption perworker ineach country.Since the golden rule isdefined asthe level ofcapital that allows the greatest
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