0b86b51c6a11b63d48ea6a9613ef3553be46adfec89aa827b28c613102b236a0

0b86b51c6a11b63d48ea6a9613ef3553be46adfec89aa827b28c613102b236a0

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Econ301wi11 Dong Won Lee - 1 - Chapter 12. Questions and Problems Answers 6. a. i. First of all, we have to rewrite the production function in terms of per effective worker terms: 1 2 YK A NK K K f A NA N A N A N AN AN     . In steady-state ,  ** AN KK sf g g A N  . Substituting 0.16, 0.1, s 4% A g and 2% N g , we get 1 2 0.16 0.1 0.04 0.02 A N  . Solving for *2 0.16 1 0.1 0.04 0.02 K AN  . ii. The corresponding output per effective worker 1 2 11 f AN AN . iii . / 0 YA N g iv / 4%. YN A gg v . 4% 2% 6%. N ggg  b. i. 0.16 0.64. 0.1 0.08 0.02 K AN ii. The corresponding output per effective worker 1 2 0.64 0.8. f AN / 0 N g / 8%. A v. 8% 2% 10%. N An increase in the rate of technological progress reduces the steady-state levels of capital and output per effective worker, but increases the rate of growth of output per worker. Therefore, an increase in the rate of technological progress will lead to higher output growth in the long run.
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0b86b51c6a11b63d48ea6a9613ef3553be46adfec89aa827b28c613102b236a0

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