Suppose that two countries are exactly alike in every respect except that the citizens of country...

Suppose that two countries are exactly alike in every respect except that the citizens of country A have a higher saving rate than the citizens of country B.

Which country will have the higher level of output per worker in the steady state? Illustrate graphically. (15 points)
Which country will have the faster rate of growth of output per worker in the steady state? (5 points)

Solutions

Expert Solution

The first image gives a basic model of Solow. If you are familiar with basics of solow model you can just refer to 2nd image.

Rahul Sunny answered 1 year ago

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