Question: A country has a per-worker production function Y t =800K t ^1/2 N t ^1/2 where Y t is total output and K t is

A country has a per-worker production functionYt=800Kt^1/2 Nt^1/2

whereYt is total output andKtis the total amount of capital

andNt is the total amount of labour.

The depreciation rate for capital is 0.1 and the population growth rate is 0.06.

The saving function isSt=0.1Yt whereSt is total national saving.

a. Put the production function in per-worker terms.

b. What are the steady-state values of capital-labour ratio and output per worker?

c. What is the Golden rule value of the capital-labour ratio?

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