Country a Has a Capital-Labour Ratio That Is Initially Twice

question 60

Essay

Country A has a capital-labour ratio that is initially twice as big as that of country B,but neither is yet in a steady state.Both countries have the same production function,f(k)= 6 k¹/².Country A has a 10% saving rate,10% population growth rate,and 5% depreciation rate,while country B has a 20% saving rate,10% population growth rate,and 20% depreciation rate.
a.Calculate the steady-state capital- labour ratio for each country.Does the initial capital-labour ratio affect your results?
b.Calculate output per worker and consumption per worker for each country.Which country has the highest output per worker? The highest consumption per worker?
c.In general,do all the fundamental characteristics of different countries need to be identical for convergence of output per worker?

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Definitions:

Symbolic Interaction

A theory that examines society through the lens of individual and group interactions, emphasizing the roles of symbols and language in social life.

Socialization

The process by which individuals learn and internalize the values, beliefs, norms, and social skills necessary to participate as functioning members of their society.

Role Distancing

A behavior or strategy whereby an individual separates themselves from the role they are expected to play, indicating a divergence between behavior and true belief or identity.

Dramaturgy

A sociological perspective that likens social interaction to the theater, where individuals perform roles before others.