Assume there is a second economy ( country B ) with everything identical to country A except for the rate of population growth , which is 2 percent . Answer the following questions for country B. Assume both countries start a k = 0 , which country grows more in the short run ( before steady state is reached ) , as given by the rate of growth of output per worker ?( hint : the further away from steady state , the faster the growth towards it ).O. Country AO. Same for bothO. Country B 1-aY = F (K, L) = AK (LE), with a = 0.4 and A = 1The rest of the economy is characterized by our usual identityY = C +I,a savings rate of 48% (s = 0.48), a depreciation rate of 2% (8 = 0.02), a ate of population growth of 1% (n = 0.01), and arate of labor-augmenting technological change of 3% (g = 0.03).Use the following notation conventions:Y• y = 1 - per-worker incomeKk- per-worker capitalLC- per-worker consumption• C=I- per-worker investment%3DLEL - per-effective-worker incomeKELCper-effective-worker consumptionk- per-effective-worker capital• CELEL- per-effective-worker investment

Population growth refers to the rate at which the hard work pressure in a financial system expands…

Answered: population growth

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Assume there is a second economy ( country B ) with everything identical to country A except for the rate of population growth , which is 2 percent . Answer the following questions for country B.

Assume both countries start a k = 0 , which country grows more in the short run ( before steady state is reached ) , as given by the rate of growth of output per worker ?

( hint : the further away from steady state , the faster the growth towards it ).

O. Country A

O. Same for both

O. Country B

1-a
Y = F (K, L) = AK (LE), with a = 0.4 and A = 1
The rest of the economy is characterized by our usual identity
Y = C +I,
a savings rate of 48% (s = 0.48), a depreciation rate of 2% (
8 = 0.02), a ate of population growth of 1% (n = 0.01), and a
rate of labor-augmenting technological change of 3% (g = 0.03).
Use the following notation conventions:
Y
• y = 1 - per-worker income
K
k
- per-worker capital
L
C
- per-worker consumption
• C=
I
- per-worker investment
%3D
L
EL - per-effective-worker income
K
EL
C
per-effective-worker consumption
k
- per-effective-worker capital
• C
EL
EL
- per-effective-worker investment

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