Consider an economy where output (Q) is a function of labor (L) and capital (K) inputs, as represented in the following function.
Consider an economy where output (Q) is a function of labor (L) and capital (K) inputs, as represented in the following function: Q=NK,L) where Q-quantity of output (i.e. GDP) K = quantity of capital input L - quantity of labor input Let s = the savings rate (ie, that portion of this year's output that is set aside to accumulate more capital for next year) Let the initial year quantities of capital and labor be as follows: Ko-100 Lo=100 Assume that the labor force (L) will grow at a constant 2% annually Meanwhile, the capital stock grows according to the amount people save and invest each year. Create a spreadsheet simulating 50 years of this economy (L, K, GDP, and Savings) i) with a savings rate (s) of 5% 11) with a savings rate (s) of 20% TO TURN IN: 1) In a single graph, graph GDP for the two economies above, over the 50 year horizon. 2) In a single graph, graph GDP per worker (i.e. labor productivity) for the two economies above, NOTE: don't turn in the data- only the graph!] over the 50 year horizon. NOTE: don't turn in the data-only the graph!) 3) Write a paragraph discussing your results from (A) & (B)
SolvedEconomic Integration 1 Answer Tarek Shohdy
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