The economies of two countries, North and South, have the same production functions, depreciation rates, and saving rates. The economies of each country can be described by the Solow growth model. Population growth is faster in South than in North.

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?

Question

The economies of two countries, North and South, have the same production functions, depreciation rates, and saving rates. The economies of each country can be described by the Solow growth model. Population growth is faster in South than in North.

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?

Quizplus · Accepted Answer

The Answer of The economies of two countries, North and South, have the same production functions, depreciation rates, and saving rates. The economies of each country can be described by the Solow growth model. Population growth is faster in South than in North.

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?

The Economies of Two Countries, North and South, Have the Same