Indonesia’s production function is Y = AKαL1-α. Assume that A (technology) = 1 and α = .33. Additionally, Indonesia’s investment/savings rate is 10%. Indonesia has 50 units of capital per worker and a constant depreciation rate of 3%. Assume that Indonesia has a constant population growth rate of 1%.
a. Derive and compute Indonesia’s output per worker.
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Get Help Now!b. Derive and compute the steady-state (i.e., the steady-state capital per worker) value of capital per worker for Indonesia.
c. Derive and compute the steady-state value of output per worker for Indonesia.
d. Graph the Solow model, including the values of output per worker and capital per worker in the steady-state. Be sure to label your graphs correctly.
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