Computing the steady state values of the capital-labor ratio output for every employee also consumption for every employee.
An economy has the per worker production function
yt = 3Ki0.5
Here yt is out per worker and kt is the capital-labour ratio. The depreciation rate is 0.1.
Savings is given by
St = 0.3Yt
Where St is total national savings and Yt is total output.
a.What are the steady state values of the capital-labor ratio, output per worker and consumption per worker?
b. Repeat part (a) for a saving rate .4. Discuss the institutes for your findings about the effect of the higher savings rate.
c. Repeat part (a) for a production yt = 4K_{i}^{5}. Discuss the initiation for your results.