Using aggregate production functions-labor-market analysis

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Two countries, A and B, have identical levels of real GDP per capita. In Country A an increase in the capital stock increases the potential output by 10%. Country B also experiences a 10% increase in its potential output, but this increase is the result of an increase in its labor for. Using aggregate production functions and labor-market analysis for the two countries, illustrate and explain how these events are likely to affect living standards in the two economies.

Reference no: EM131380625

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