Question: The variable The variable K is capital per worker per unit of worker efficiency, or capital per worker modified to reflect the difference in efficiency

The variable

The variable K is capital per worker per unit of worker efficiency, or capital per worker modified to reflect the difference in efficiency among workers. Consider two countries, A and B, with labor efficiencies EA = 0.5 and EB = 1.5, respectively. (a) If the size of the labor force is the same in each country and is the sarn in each country, which country will have a larger aggregate capital K in steady state? (b) Given your answer to question 2a above, briefly explain why K provide a better measure of the capital per worker needed in an economy.

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