Consider two economies, with the same production function, saving rate, depreciation rate, population growth rate and...

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Consider two economies, with the same production function, saving rate, depreciation rate, population growth rate and technological growth rate. Neither economy is at their steady state. Economy A currently has a smaller capital stock per effective worker than Economy B. a) Illustrate this situation. Be sure to label the axes; curves for actual investment, break-even investment and the production function; the steady-state capital per effective worker; the steady-state output per effective worker; each economy's current capital per effective worker; and each economy's current output per effective worker. b) Which of the two economies would be expected to initially have the higher growth rate of output per effective worker? Explain briefly. Consider two economies, with the same production function, saving rate, depreciation rate, population growth rate and technological growth rate. Neither economy is at their steady state. Economy A currently has a smaller capital stock per effective worker than Economy B. a) Illustrate this situation. Be sure to label the axes; curves for actual investment, break-even investment and the production function; the steady-state capital per effective worker; the steady-state output per effective worker; each economy's current capital per effective worker; and each economy's current output per effective worker. b) Which of the two economies would be expected to initially have the higher growth rate of output per effective worker? Explain briefly. Consider two economies, with the same production function, saving rate, depreciation rate, population growth rate and technological growth rate. Neither economy is at their steady state. Economy A currently has a smaller capital stock per effective worker than Economy B. a) Illustrate this situation. Be sure to label the axes; curves for actual investment, break-even investment and the production function; the steady-state capital per effective worker; the steady-state output per effective worker; each economy's current capital per effective worker; and each economy's current output per effective worker. b) Which of the two economies would be expected to initially have the higher growth rate of output per effective worker? Explain briefly.

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a In this situation Economy A has a smaller capital stock per effective worker compared to Economy B Lets illustrate this situation On the xaxis we ha... View the full answer