3) There are two countries, Anihc (country A) and Bapan (country B), with the same production function f (k) = 5k0.5. However, country A has saving rates of 0.2, depreciation rate of 0.2 and population growth of 0.2; while country B has saving rates of 0.1, depreciation rate of 0.15 and population growth of 0.05. Using the Solow model: a. Find the steady state capital-labor ratio for each country. b. Find the steady state output per worker, and the steady state consumption per worker for each country. c. Which country produces the most per capita? Which country consumes the most per capita?

3) There are two countries, Anihc (country A) and Bapan (country B), with the same production function f (k) = 5k0.5. However, country A has saving rates of 0.2, depreciation rate of 0.2 and population growth of 0.2; while country B has saving rates of 0.1, depreciation rate of 0.15 and population growth of 0.05. Using the Solow model: a. Find the steady state capital-labor ratio for each country. b. Find the steady state output per worker, and the steady state consumption per worker for each country. c. Which country produces the most per capita? Which country consumes the most per capita?

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter25: Production And Growth

Section: Chapter Questions

Problem 1CQQ

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