1. Suppose that both Country A and Country B have the same production function: Y/L = 6*(K/L)0.5. However, Country A...
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1. Suppose that both Country A and Country B have the same production function: Y/L = 6*(K/L)0.5. However, Country A has a capital-to-labor ratio that is initially twice as big as Country B. In addition, Country A has a 10% saving rate, a 10% labor force growth rate and a 5% depreciation rate while Country B has a 20% saving rate, a 10% labor force growth rate and a 20% depreciation rate.
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