Question: Assume we are in the basic Solow model. Two economies are in the transition to their long-run equilibrium. Economy 1's GDP per-capita is growing at

  1. Assume we are in the basic Solow model. Two economies are in the transition to their long-run equilibrium. Economy 1's GDP per-capita is growing at 4% while Economy2'sGDPper-capitaisgrowingat3%.Botheconomieshave:=0.2,=1/3,

= 0.1, and a current level of capital per-capita of = 1. Using the lecture notes' formulaforthegrowthrateof,whatistheleveloftechnologyofEconomy1(1) and Economy 2 (2)?

  1. 1=1.1 and2=1.
  2. 1=1.1 and2=0.95.
  3. 1=0.95and2=0.8.
  4. 1=0.8 and2=0.9

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