Q1:

Consider the two-country model. Suppose that A,1 > A,2 and that the two countries are in steady state. Suppose now that Country 1 raises the fraction of the labor force that is doing R&D. This change will create:

options:

an increase in the growth of output per worker in Country 2

an immediate increase in output per worker in Country 1(this is incorrect)

a decrease in the technology gap between the two countries

a decrease in the growth of productivity in Country 2

[here is a correct statement to help you answer: Consider the two-country model. Suppose that A,1 > A,2 and that the two countries are in steady state. Suppose now that Country 1 raises the fraction of the labor force that is doing R&D. This change will cause a drop in the level of output per worker and an increase in the growth rate of productivity as well as output per worker in both countries]

Q2:

Consider the one-country model of technology and growth. Suppose that L = 1, = 5, and _A = 0.5. Further, assume the initial value of A is also 1. What is the growth ofoutput per worker?

options:

15 percent

50 percent(this is incorrect)

25 percent

10 percent