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How to do exercise 2 part b Exercise 2: The Solow Model - technicalities a. What is the steady-state level of capital? What happens to

How to do exercise 2 part b

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Exercise 2: The Solow Model - technicalities a. What is the steady-state level of capital? What happens to an economy once it is reached? [10%, about 200 words] b. Consider 3 the three economies (AB and C) in the gure below. They all have the same steady state, but different levels of capital per person kA, kB and kc. Will these economy eventually converge to the same production per capita? Which one is growing at a faster pace given their current level of capital per worker? Why? [25%, about 500 words]

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