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420worksheet10 - the labor force grows at rate n and...

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Worksheet 10 Unemployment in Solow’s model 1. Consider how unemployment would affect the Solow growth model. Suppose that output is produced according to the production function, Y = K α [(1- u )L] 1-α , where K is capital, L is the labor force, and u is the natural rate of unemployment. The national saving rate is s,
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Unformatted text preview: the labor force grows at rate n , and capital depreciates at rate δ. a. Express the output per worker as a function of capital per worker and the natural rate of unemployment. Describe steady state of this economy....
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