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Homework answers / question archive / Suppose an economy experiences both positive population growth (gv) and technological progress (S

Suppose an economy experiences both positive population growth (gv) and technological progress (S

Economics

Suppose an economy experiences both positive population growth (gv) and technological progress (S.). The capital depreciation rate is 8. The saving rate is exogenously given as s. (a) Draw a diagram with variables in per effective worker terms to show how a steady state level of capital per effective worker (KAN) is determined. Also explain your answers in words. (5 points) (b) We further assume that the aggregate production function is given by Y = K"(AN)-a, where O<a<1. Based on your results in (a), derive the steady-state level of capital per effective worker (KAN) and the steady-state output per effective worker (Y/AN)". Show your derivations. (5 points) (a) Continue from (b), we assume a=0.5, the total output (Y) is growing at 6%, the 7 capital stock (K) is growing at 4%, and the labor (N) is growing at 2%. How much of the growth in the total output can be attributed to growth in capital, labor, and technology, respectively? Show your derivations and calculations. (5 points)

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