*Please answer all of this question*

Suppose there are two countries. In the richcountry, the representative consumer has Hr units of human capital and marginal product of efficiency units of labour is zr. In the poorcountry, the representative consumer has Hp units of human capital and marginal product of efficiency units of labour is zp. Assume that b and u are the same in the rich and poorcountries, that Hr>Hp, and that zr>zp.

a. How do the levels of income percapita, the growth rates of income percapita, and real wages compare between the rich and poorcountries?

The level of income per capita will be

-higher

-lower

-the same

in the rich country compared to the poor country. The real wages will be

-higher

-the same

-lower

in the rich country compared to the poor country. The growth rates of income per capita

-will be the same in both countries.

-will be higher in the rich country.

-will be higher in the poor country.

b. If consumers could choose their country ofresidence, where would they want tolive?

Consumers, if given thechoice, would choose to live in

-the poor country,

--the rich country,

because

-per capita income will increase at a faster rate.

-marginal product of efficiency units of labour and human capital levels are higher, which implies higher wages and higher consumption.

-efficiency of human capital accumulation is higher, so consumers become more skilled at a faster rate.

c. If each country could determine immigrationpolicy, what should they do to maximize the welfare of the currentresidents?

Based on the endogenous growthmodel, the immigration policy

A.

in the poor country should incentivize residents of the rich country to immigrate to the poor country to improve the welfare of their native residents.

B.

in the poor country should restrict the number of migrants from the rich country because growth rates in the poor country will be higher because the initial human capital level is lower.

C.

will not affect the residents. The endogenous growth model has the property that the welfare of each individual is independent of how many other individuals there are in the economy.

D.

in the rich country should restrict the number of migrants from the poor country to prevent decreases in the growth rates ofconsumption, humancapital, and output.

d. What is the immigration policy that maximizes the welfare of the citizens of bothcountries?

An immigration policy in the

-poor country

-rich country

that

-restricts residents from emigrating from the other country

-admits anyone who wishes to emigrate

will maximize aggregate welfare.