The economies of two countries, Thrifty and Profligate, have the same production functions

and depreciation rates. There is no population growth or technological progress in either country.

The economies of each country can be described by the Solow growth model. The saving rate in

Thrifty is 0.3. The saving rate in Profligate is 0.05.

a. In which country is the level of steady-state output per worker larger?

Explain.

b. In which country is the steady-state growth rate of output per worker

larger?

c. In which country is the growth rate of steady-state total output greater?