Calculate the country''s steady state level of output

Reference no: EM13177219

A country is described by the Solow Model with a production function y = \(k^{1/2}\) where y is output per worker and k is capital per worker. Now suppose that the fraction of output invested (or saved) is 50%. Assume that the depreciation rate is 5% and population growth is 0%.

A) Calculate the country's steady state level of output per worker?

B) Now suppose k is equal to 400. Is the country at its steady-state level of output per worker, above the steady-state or below the steady state? Show how you reached your conclusion.

Reference no: EM13177219

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