Answered step by step
Verified Expert Solution
Question
1 Approved Answer
If an economy has the following production function, Y = AK () L (1) (Y: agg. output, A: total factor productivity, K: capital, L: labour).
If an economy has the following production function, Y = AK() L(1)
(Y: agg. output, A: total factor productivity, K: capital, L: labour).
and the investment function is : (n + )k , where < 1
and = 0.4.
Should optimal savings rate = capital share of income? Why or why not?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started