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Problem set 2: Savings in the Solow model (15 points) The economy of the island state of Petunia is developing according to the Solow model
Problem set 2: Savings in the Solow model (15 points) The economy of the island state of Petunia is developing according to the Solow model of growth. For Petunia, the following production function applies: Yt = 1' KtL You also know that the overall savings rate 3 IS 0.3; The depreciation rate 8 is 0.1; The number of persons in employment L is 200: The per capita capital stock at time 0. k0, is 4. a) Calculate the per capita output ylof the Petunian economy in period 1(t = 1), as well as the growth rate of per capita output between periods 0 and 1 (Q1). (5 points) Per capita output y12 Growth rate g1
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