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Suppose we know that output in the economy is given by the production function: It = Ath, L . If 3, 2/3 total factor productivity

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Suppose we know that output in the economy is given by the production function: It = Ath, L . If 3, 2/3 total factor productivity (A) is growing at a rate of 2% per year, the capital stock (K) is growing by 4%, and the labor supply (L) is growing by 2%, a) What would happen to the growth rate of output per worker if capital growth slowed to 3% a year while labor and TFP continued to grow at the same rates - include a calculation of output per worker growth 3 b) What long run growth rate in output per worker do you think this economy will eventually move towards over time? Explain your answer (what changes, why does it change, and what is the final long run growth rate of output per worker (Y/L)

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