Question
The economies of two countries, Thrifty and Profligate, have the same production functions and depreciation rates....
The economies of two countries, Thrifty and Profligate, have the same production functions and depreciation rates. There is no population growth in either country. The economies of each country can be described by the Solow growth model. The saving rate in Thrifty is 0.3. The saving rate in Profligate is 0.05.
(a) Which country will have a higher level of steady-state output per worker?
(b) Which country will have a higher growth rate of output per worker in the steady state?
(c) Which country will have a higher growth rate of total output in the steady state?
Homework Answers
Answer #1
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