# Question

In the Solow growth model, suppose that the per-worker production function is given by y = zk.3, with s = 0.25, d = 0.1, and n = 0.02.

(a) Suppose that in country A, z = 1. Calculate per capita income and capital per worker.

(b) Suppose that in country B, z = 2. Calculate per capita income and capital per worker.

(c) As measured by GDP per capita, how much richer is country B than country A? What does this tell us about the potential for differences in total factor productivity to explain differences in standards of living across countries?

(a) Suppose that in country A, z = 1. Calculate per capita income and capital per worker.

(b) Suppose that in country B, z = 2. Calculate per capita income and capital per worker.

(c) As measured by GDP per capita, how much richer is country B than country A? What does this tell us about the potential for differences in total factor productivity to explain differences in standards of living across countries?

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