4. Suppose two countries have identical constant-returns-to-scale production functions and start with the same capital stock per effective worker (). Both countries have a population growth rate of 1%, rate of k technological progress of 3%, and a depreciation rate of 10%. However, the savings rate differs in each country. Country Sunny saves 15% of its income, while Country Rainy saves 30%. Assume that the initial capital stock per effective worker () lies below each country's respective steady state level. Which country will exhibit faster changes in capital per effective worker (A ) in the first couple periods? Explain and illustrate your answer on a Solow graph. All curves/axes are expressed in terms of per effective worker and
4. Suppose two countries have identical constant-returns-to-scale production functions and start with the same capital stock per effective worker (). Both countries have a population growth rate of 1%, rate of k technological progress of 3%, and a depreciation rate of 10%. However, the savings rate differs in each country. Country Sunny saves 15% of its income, while Country Rainy saves 30%. Assume that the initial capital stock per effective worker () lies below each country's respective steady state level. Which country will exhibit faster changes in capital per effective worker (A ) in the first couple periods? Explain and illustrate your answer on a Solow graph. All curves/axes are expressed in terms of per effective worker and
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