Question
Suppose that two nations start out in 2018 with identical levels of output per work hourssay, $100 per hour. In the first nation, labor productivity
Suppose that two nations start out in 2018 with identical levels of output per work hourssay, $100 per hour. In the first nation, labor productivity grows by 1percent per year. In the second, it grows 2 percent per year. Use a calculator or a spreadsheet todeterminehow much output per houreachnation will be producing 20 years later,assuming thatlabor productivity growth rates do not change. Then,determinehow much each will beproducingper hour 100 years later. What does the results tell you about the effects ifsmall differencesin productivity growth rates?
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