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Consider the following growth Model {C} NEE! = (1 SJYE in r. = AKFNE'H [Ki Km = (1 am + ,1; {N} Nr+1 = NE[1+
Consider the following growth Model {C} NEE! = (1 SJYE in r. = AKFNE'H [Ki Km = (1 am + ,1; {N} Nr+1 = NE[1+ PM) The new element in this model is that the price of capital falls each period by rate vg. The idea is that each period one unit of output saved can buy converted into a greater quantity of phvsical capital hecause improvements in the technology for producing machines. For example, in 201D one unit ofoutput saved could be converted into one machine, but in 2020 that same unit of output saved could be converted into 2 machines. a. Take the Aggregate representation above and convert it into its per ca pita representation. h. Solve for the growth rate of the per capita output, per ca pita capital, the price of capital, the wage rate and the rental price of capital
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