Consider two countries. One has a very low level of capital per worker (country A), while the other has a high level of capital per worker (country B).

1. According to the Solow model, which country should most likely grow faster? Why? Use a graph to assist your answer.
2. In which country is the rate of return to capital higher? (chapter 3 defines this return) Carefully explain your answer with equations.
3. The Solow model is a closed economy model. Suppose now country A and B have free trade. In particular, capital can flow freely between the two countries. Will capital flow from A to B, or from B to A? Why?
4. Nigeria had low capital per worker in the 1960s, and abundant natural resources. It was like country A. Western countries such as the US and UK were like country B. Your answers in 1-3, assuming you answered correctly, were exactly economists' predictions about what would happen to these economies. Surprisingly, none of predictions came true.Can you think of reasons why these predictions did not come true? Follow your answers 1 to 3, explain one-by-one why your predictions did not come true in reality. Mark your answers 4, 5, and 6. All your words should be typed, only graphs should go on paper.