Question: Suppose that the production function is given by Y=K1/21/2 a. Derive the steady state levels of capital per worker and output per worker in
Suppose that the production function is given by Y=K1/21/2 a. Derive the steady state levels of capital per worker and output per worker in terms of the saving rate, s, and the depreciation rate, . b. Suppose = 0.05 and s = 0.2. Find out the steady state output per worker. c. Suppose o = 0.05 but s increases to 0.5. Find out the steady state output per worker and compare your result with your answer in part b. Explain the intuition behind your results.
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