Country A and Country B operate below their steady-state levels y_ss; have the s
ID: 1208920 • Letter: C
Question
Country A and Country B operate below their steady-state levels y_ss; have the same rates of investment x and deprecation delta, the same level of productivity A, and the same levels of output per worker y. They differ, however, in their rates of population growth n. The growth rate of population in Country A is greater than in Country B: n_A > n_B. The Solow model, assuming equal alpha- values for both countries, suggests the following ratio off their steady-state levels: y_A_ss/y_B_ss = [delta_g + n_g/delta_A + n_a]^a/1 - a Which country has a greater steady-state level? Country A Country B Both countries have the same steady-state level Which country is farther away from its respective steady-state level? Country A Country B Both countries are at the same distance from their steady-state level Which country has a higher growth rate of output per worker according the Solow model? Country A Country B Both countries have equal growth rates.Explanation / Answer
7. Country B.
8. A
9. B