276 of 679 Q + ... SO3 1. LounchPod . Country A and country B both b. What happens subsequently to output per have the production function worker in the postwar economy? Is the growt rate of output per worker after the war smalle Y = F(K, L) = K1/312/3 or greater than it was before the war? a. Does this production function have constant LounchPod . Consider an economy described by returns to scale? Explain. the production function: Y = F(K, L) = K0410 . What is the per-worker production function, a. What is the per-worker production function Y = f(ke)? b. Assuming no population growth or techno- c. Assume that neither country experiences logical progress, find the steady-state capital population growth or technological progress stock per worker, output per worker, and and that 20 percent of capital depreciates each consumption per worker as a function of the year. Assume further that country A saves saving rate and the depreciation rate. 10 percent of output each year and country c. Assume that the depreciation rate is 15 per- B saves 30 percent of output each year. Using cent per year. Make a table showing steady- your answer from part (b) and the steady-state state capital per worker, output per worker, condition that investment equals depreciation, and consumption per worker for saving rates find the steady-state level of capital per work- of 0 percent, 10 percent, 20 percent, 30 per- er for each country. Then find the steady-state cent, and so on. (You might find it easiest to levels of income per worker and consumption use a computer spreadsheet.) What saving rat per worker. maximizes output per worker? What saving d. Suppose that both countries start off with a rate maximizes consumption per worker? capital stock per worker of 1. What are the 1. Use information from Chapter 3 to find the levels of income per worker and consumption marginal product of capital. Add to your table per worker? from part (c) the marginal product of capital e. Remembering that the change in the capital net of depreciation for each of the saving stock is investment less depreciation, use a rates. What does your table show about the calculator (or, better yet, a computer spread- relationship between the net marginal prod sheet) to show how the capital stock per uct of capital and steady-state consumption? worker will evolve over time in both coun- 1. "Devoting a larger share of national output to tries. For each year, calculate income per investment would help restore rapid productivity worker and consumption per worker. How growth and rising living standards." Do you agre many years will it be before the consumption with this claim? Explain, using the Solow mode in country B is higher than the consumption in country A? . Draw a well-labeled graph that illustrates the steady state of the Solow model with population 2. In the discussion of German and Japanese post- growth. Use the graph to find what happens war growth, the text describes what happens to steady-state capital per worker and income when part of the capital stock is destroyed in a per worker in response to each of the following war. By contrast, suppose that a war does not exogenous changes. directly affect the capital stock, but that casualties reduce the labor force. Assume the economy was . A change in consumer preferences increases in a steady state before the war, the saving rate the saving rate. is unchanged, and the rate of population growth . A change in weather patterns increases the after the war is the same as it was before. depreciation rate. a. What is the immediate impact of the war on . Better birth-control methods reduce the rate of population growth. CD total output and on output per person? Esc X F1 F2 F3 F6 2 A 15