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1. Suppose that the economy’s production function is Y = K.2 (eL).8 , that the saving...

1. Suppose that the economy’s production function is Y = K.2 (eL).8 , that the saving rate, s, is equal to 10 percent, and the depreciation rate, δ, is equal to 3 percent. Suppose further that the number of workers, L, grows at 1 percent a year and that the rate of technological progress, g, is 1 percent per year. Find the steady-state values of the following:

a. The capital stock per efficiency units of labor 2

b. Output per efficiency units of labor

c. The growth rate of output per efficiency units of labor

d. The growth rate of output per worker

e. The growth rate of output

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