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In: Economics

1. Given the production function Y = zK1/5N4/5, using the Solow growth model: b) Suppose z=1,...

1. Given the production function Y = zK1/5N4/5, using the Solow growth model:

b) Suppose z=1, n = 0.01 and d = 0.10. Using the Golden Rule of Capital Accumulation, what is the steady-state capital per worker, output per worker, and consumption per worker?

c) Suppose z = 1, n = 0.01 and d = 0.14. Using the Golden Rule of Capital Accumulation, what is the steady state capital per worker, output per worker, and consumption per worker?

d) Show graphically the differences in the steady-state capital per worker between the situations characterized in (b) and (c).

e) Using the generic steady-state equilibrium condition, what is the expression for the derivative of steady-state capital with respect to the depreciation rate (dk*/ dd)? What is the sign of this derivative?

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Expert Solution

Rahul Sunny answered 1 year ago
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