Suppose That Two Economies Are Identical, Having the Same Saving

question 103

Essay

Suppose that two economies are identical, having the same saving rates, population growth rates, and efficiency of labor. What will be the steady state level of income per person in the economy when
a. One country has smaller capital stock than the other, and
b. One country has lower saving rate than the other.

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Definitions:

Unfreezing

The initial phase in the change process, where existing behaviors or attitudes are challenged to prepare for change.

Changing

The process of making something different, usually by altering, substituting, or transforming it.

Refreezing

In the context of change management, it is the process of stabilizing a group or organization at a new state of equilibrium.

Decision-making Process

A systematic approach to making choices among various options based on reasoning and analysis.