3. In Country 1 the rate of investment is 5%, and in Country 2 it is 20%. The two countries have the same levels of productivity, A, and the same rate of depreciation, d. (a) Assuming that the value of a is 1/3, what is the ratio of steady-state output per worker in Country 1 to steady-state output per worker in Country 2? (b) What would the ratio be if the value of a were 2/3?

3. In Country 1 the rate of investment is 5%, and in Country 2 it is 20%. The two countries have the same levels of productivity, A, and the same rate of depreciation, d. (a) Assuming that the value of a is 1/3, what is the ratio of steady-state output per worker in Country 1 to steady-state output per worker in Country 2? (b) What would the ratio be if the value of a were 2/3?

Principles of Economics 2e

2nd Edition

ISBN:9781947172364

Author:Steven A. Greenlaw; David Shapiro

Publisher:Steven A. Greenlaw; David Shapiro

Chapter20: Economic Growth

Section: Chapter Questions

Problem 11SCQ: Would you expect capital deepening to result in diminished1etmns? Why or why not? Would you expect...

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