Two economies Rich (R) and Poor (P) are described by the Solow growth model and they share the same Cobb-Douglas production function: F(K,L)=AKL1 but with different quantities of capital and labour. Economy R's saving rate is 32% while P's is 10%. The population growth rate of R and P is 1% and 3%, respectively. Both economies share common technological progress at a rate of 2% annually and depreciation at a rate of 5% annually. Income per worker in R is actually 16 times higher than income per worker in P. Can you explain this fact by changing the value of the parameter ? What must it be? Can you think of any way to justify such a value for this parameter? How else might you explain the significant difference in income between economy R and P ? [4] Two economies Rich (R) and Poor (P) are described by the Solow growth model and they share the same Cobb-Douglas production function: F(K,L)=AKL1 but with different quantities of capital and labour. Economy R's saving rate is 32% while P's is 10%. The population growth rate of R and P is 1% and 3%, respectively. Both economies share common technological progress at a rate of 2% annually and depreciation at a rate of 5% annually. Income per worker in R is actually 16 times higher than income per worker in P. Can you explain this fact by changing the value of the parameter ? What must it be? Can you think of any way to justify such a value for this parameter? How else might you explain the significant difference in income between economy R and P ? [4]