Study question on Full Employment Model:

a. While we often consider the macro-economic models to cover an entire economy, one could apply such models to regions of a larger economy. For example, consider California and Mississippi as two separate economies. In 2019 California had a state real GDP per capita of $70,662 and Mississippi came in at $35,015 (both adjusted to $2012). Over the past decade California's GDP per capita growth rate was roughly 2% per year whereas Mississippi's growth rate was roughly 0% per year. Assuming this is the long-run and the full employment model holds, what might explain this difference in outcomes? (There may be more than one reason, pick one and explain why that might help explain the difference.)

b. Construction season, also known as summer, is just around the

corner and work will be done on roads and other infrastructure. In the US that

is often done with large machinery (e.g., concrete trucks, pavement spreaders,

etc.). In lower income countries these same activities are more likely done by

hand (i.e., more workers and less machines). Why might that be the case?