Tutorial 2B - Economic Growth Revised

Tutorial 2B - Economic Growth Revised - Applications 1....

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1 Tutorial 2B Economic Growth Short Answer Questions 1. If y = k 1/2 , there is no population growth or technological progress, 5 percent of capital depreciates each year, and a country saves 20 percent of output each year, calculate the steady-state level of capital per worker. 2. If a larger share of national output is devoted to investment, will living standards rise or fall?
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Unformatted text preview: Applications 1. Suppose that two countries are exactly alike in every respect except that the citizens of country A have a higher saving rate than the citizens of country B. (a) Which country will have the higher level of output per worker in the steady state? Illustrate graphically. (b) Which country will have the faster rate of growth of output per worker in the steady state?...
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This note was uploaded on 11/12/2011 for the course ECON 2003 taught by Professor Macoeconomics2 during the Spring '10 term at University of the West Indies at Mona.

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