If we define

\bar { s } _ { 1 }

and

\bar { s } _ { 2 }

As the saving rates in Countries 1 and 2, respectively,

\bar { d } _ { 1 } = \bar { d } _ { 2 }

As the depreciation rates in Countries 1 and 2, respectively, and

\bar { A } _ { 1 }

And

\bar { A } _ { 2 }

As productivity in Countries 1 and 2, respectively, in the Solow model, the equation ________ predicts that ________ contribute the most to differences in steady-state output per worker.
A)

\frac { y _ { 1 } ^ { * } } { y _ { 2 } ^ { * } } = \left( \frac { \bar { A } _ { 1 } } { \bar { A } _ { 2 } } \right) ^ { 3 / 2 }

; productivity differences
B)

\frac { y _ { 1 } ^ { * } } { y _ { 2 } ^ { * } } = \left( \frac { \bar { A } _ { 1 } } { \bar { A } _ { 2 } } \right) ^ { 3 / 2 } \times \left( \frac { \bar { s } _ { 1 } } { \bar { s } _ { 2 } } \right) ^ { 1 / 2 }

; saving rate differences
C)

\frac { y _ { 1 } ^ { * } } { y _ { 2 } ^ { * } } = \left( \frac { \bar { s } _ { 1 } } { \bar { s } _ { 2 } } \right) ^ { 3 / 2 } \times \left( \frac { \bar { A } _ { 1 } } { \bar { A } _ { 2 } } \right) ^ { 1 / 2 }

; productivity differences
D)

\frac { y _ { 1 } ^ { * } } { y _ { 2 } ^ { * } } = \left( \frac { \bar { A } _ { 1 } } { \bar { A } _ { 2 } } \right) ^ { 3 / 2 } \times \left( \frac { \bar { s } _ { 1 } } { \bar { s } _ { 2 } } \right) ^ { 1 / 2 }

; productivity differences
E)

\frac { y _ { 1 } ^ { * } } { y _ { 2 } ^ { * } } = \left( \frac { \bar { s } _ { 1 } } { \bar { s } _ { 2 } } \right) ^ { 1 / 2 }

; saving rate differences

An Increase in ________ Leads to a Higher Steady-State Level

Multiple Choice

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