Question

Instructions: This is quiz will be graded on not only correctness but also using the correct process. Consider an economy: Y=4K.5N.5 S=0.3Y d=5% n=5% a) What are the steady-state values of capital-labor ratio? Output per worker? Consumption per worker? b) Suppose that the government institutes a policy that encourages savings increasing it to 40% instead of 30%. Show graphically and calculate all the steady state values. c) Instead of encouraging savings suppose that the government institutes a policy that discourages population growth decreasing it from 5% to 3%. Show graphically and calculate all the steady state values.

Answer 1