Exam 9: Economic Growth II: Technology, Empirics, and Policy

If the production function is Y = AK^2/3L^1/3 in the land of Solovia, and the labor force increases by 5 percent while capital is constant, labor productivity will:

Are persistent increases in standard of living possible in a steady state economy?

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.