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

question 66

Essay

Country A has a capital-labor 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)= 6k^1/2.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-labor ratio for each country.Does the initial capital-labor 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?

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Definitions:

Cathartic Release

The process of releasing or expressing pent-up emotions, which is believed to lead to psychological relief.

Active-role

Involvement or participation in activities or situations where one has influence or control over the outcome.

Avoidant Coping Strategies

Methods of dealing with stress by avoiding the stressor altogether, which can include denial, distraction, or withdrawal.

Emotion-focused Strategies

Coping mechanisms that aim to manage and reduce the intensity of an emotional reaction to a problem, rather than addressing the problem itself.