Suppose that the economy's production function is Y = K VAN that the saving rate, s,...

 

Transcribed Image Text:

Suppose that the economy's production function is Y = √K VAN that the saving rate, s, is equal to 24%, and that the rate of depreciation, 8, is equal to 3%. Suppose further that the number of workers grows at 2% per year and that the rate of technological progress is 1% per year. (a) Find the steady-state values of the variables listed in (i) through (v). i. The capital stock per effective worker ii. Output per effective worker (b) Suppose that the rate of technological progress increases to 19% per year. Recompute the answers to part (a). Suppose that the economy's production function is Y = √K VAN that the saving rate, s, is equal to 24%, and that the rate of depreciation, 8, is equal to 3%. Suppose further that the number of workers grows at 2% per year and that the rate of technological progress is 1% per year. (a) Find the steady-state values of the variables listed in (i) through (v). i. The capital stock per effective worker ii. Output per effective worker (b) Suppose that the rate of technological progress increases to 19% per year. Recompute the answers to part (a).