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Suppose that the economy's production function is Y = K^.2 (eL)^.8 , that the saving rate, s, is equal to 10 percent, and the depreciation
Suppose that the economy's production function is Y = K^.2 (eL)^.8 , that the saving rate, s, is equal to 10 percent, and the depreciation rate, , is equal to 3 percent. Suppose further that the number of workers, L, grows at 1 percent a year and that the rate of technological progress, g, is 1 percent per year. Find the steady-state values of the following:
a. The capital stock per efficiency units of labor
b. Output per efficiency units of labor
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