Question: 2. In a country the production function is y = k /2 . The fraction of output invested, y is 0.25. The depreciation rate, 8,

2. In a country the production function is y = k /2 . The fraction of output invested, y is 0.25. The depreciation rate, 8, is 0.05. a. What are the steady-state levels of capital per worker, k, and output per worker, y? b. In year 1, the level of capital per worker is 16. In a table like the following one, show how capital and output change over time. Continue this table up to year 8. Change in Capital Year Capital Output Investment Depreciation Stock 1 16 4 1 0.8 0.2 2 16.2 Crop one question at a ti c. Calculate the growth rate of output between year 1 and 2. d. Calculate the growth rate of output between year 7 and 8. e. Comparing your answers from part c and d, what can you conclude about the speed of output growth as a country approaches its steady state

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