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The economy of Asgard has a well developed financial system, where resources flow to the capital...

The economy of Asgard has a well developed financial system, where resources flow to the capital investments with the highest marginal product. The economy of Titan has a less developed financial system that excludes some would be investors. Which nation would you expect to have a higher level of total factor productivity? Explain why. Lastly, Suppose the two economies have the same saving rate, depreciation rate, and rate of technological progress... According to the Solow growth model, how does output per worker, capital worker, and the capital output ratio compare in the two economies? (Answer must accompany model graph). Assume the production function is Cobb-Douglass. Compare the real wage and the real rental price of capital in the two countries. Who benefits from having a better developed financial system? (answer must accompany model graph)

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Rahul Sunny answered 1 year ago
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