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Economic Growth The production function of a hypothetical closed economy is given by =10^0.5^0.5 Y=10K0.5N0.5 Where Yis total output, K is capital stock, and N
Economic Growth
The production function of a hypothetical closed economy is given by
=10^0.5^0.5
Y=10K0.5N0.5
Where Yis total output, K is capital stock, and N is the workforce. The depreciation rate is 0.3, and the population growth rate is 0.2. National saving is given by
=0.4
where is total national saving and is total output.
- What are the steady-state values of capital-labor ratio, output per worker, and consumption per worker?
- Suppose the saving rate in the economy increased to50%
- 50%.Find the steady-state values of capital-labor ratio, output per worker, and consumption per worker.
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