2. The variable k is capital per worker per unit of worker efficiency, or capital per...

 

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2. The variable k is capital per worker per unit of worker efficiency, or capital per worker modified to reflect the difference in efficiency among workers. Consider two countries, A and B, with labor efficiencies EA 1.5 and EB = 3, respectively. (a) If the size of the labor force is the same in each country and k* is the same in each country, which country will have a larger aggregate capital K in steady state? (b) Given your answer to question 2a above, briefly explain why k provide a better measure of the capital per worker needed in an economy. 2. The variable k is capital per worker per unit of worker efficiency, or capital per worker modified to reflect the difference in efficiency among workers. Consider two countries, A and B, with labor efficiencies EA 1.5 and EB = 3, respectively. (a) If the size of the labor force is the same in each country and k* is the same in each country, which country will have a larger aggregate capital K in steady state? (b) Given your answer to question 2a above, briefly explain why k provide a better measure of the capital per worker needed in an economy.