If We Define $\bar { s } _ { 1 }$

question 118

Multiple Choice

If we define $\bar { s } _ { 1 }$ and $\bar { s } _ { 2 }$
As the saving rates in Countries 1 and 2, respectively, $\bar { d } _ { 1 } = \bar { d } _ { 2 }$
As the depreciation rates in Countries 1 and 2, respectively, $\bar { A } _ { 1 }$
And $\bar { A } _ { 2 }$
As productivity in Countries 1 and 2, respectively, and the production function per worker is $y _ { t } = \bar { A } \bar { K } _ { t } ^ { 1 / 3 }$
In both countries, the Solow model predicts the ratio of GDP per worker in Country 1 relative to Country 2 is:

• A) \(\frac { y _ { 1 } ^ { * } } { y _ { 2 } ^ { * } } = \left( \frac { \bar { A } _ { 1 } } { \bar { A } _ { 2 } } \right) ^ { 3 / 2 } \times \left( \frac { \bar { s } _ { 1 } } { \bar { s } _ { 2 } } \right) ^ { 1 / 2 }\)
• B) \(\frac { y _ { 1 } ^ { * } } { y _ { 2 } ^ { * } } = \left( \frac { \bar { d } _ { 1 } } { \overline { d _ { 2 } } } \right) ^ { 3 / 2 } \times \left( \frac { \bar { s } _ { 1 } } { \bar { s } _ { 2 } } \right) ^ { 1 / 2 }\)
• C) \(\frac { y _ { 1 } ^ { * } } { y _ { 2 } ^ { * } } = \left( \frac { \bar { s } _ { 1 } } { \bar { s } _ { 2 } } \right) ^ { 3 / 2 } \times \left( \frac { \bar { A } _ { 1 } } { \bar { A } _ { 2 } } \right) ^ { 1 / 3 }\)
• D) \(\frac { y _ { 1 } ^ { * } } { y _ { 2 } ^ { * } } = \left( \frac { \bar { d } _ { 1 } } { \bar { d } _ { 2 } } \right) ^ { 3 / 2 }\)
• E) \(\frac { y _ { 1 } ^ { * } } { y _ { 2 } ^ { * } } = \left( \frac { \bar { s } _ { 1 } } { \bar { s } _ { 2 } } \right) ^ { 1 / 2 }\)

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