LO 1 In the Solow growth model, suppose the per worker production function is given by y = zk0.4, with s = 0.4, d = 0.2, and n = 0.02.

(a) Suppose that in country A, z = 1. Calculate income per worker and capital per worker in the steady state.

(b) Suppose that in country B, z = 2. Calculate income per worker and capital per worker in the steady state.

(c) Will countries A and B converge in terms of income per worker? Explain.

(d) Based on your answers to parts

(a) and (b), if both countries increase z to 3, which country would have higher economic growth during the transition period to the steady state?