# Derive the steady state capital per effective worker and output per effective worker given the...

## Question:

Derive the steady state capital per effective worker and output per effective worker given the production function Y =F(K,AN) where the saving rate is s, the depreciation rate is , the growth rate of technology is gA and the growth rate of population is gN . Now, the production function is {eq}Y=K^{0.5}\left ( 5N \right )^{0.5} {/eq} the saving rate is 0.6, the depreciation rate is 0.7, the growth rate of technology is 3% and the growth rate of population is 1.5%.

What is the steady-state capital per effective worker level and output per effective worker level?

## The Solow Growth Model:

The Solow growth model is a macroeconomic model that aims at explaining the economy's equilibrium in the long run. Solow tries to examine how certain factors such as the savings rate, the population growth rate, the technological progress and the capital accumulation affects the economic growth in the long run. Solow argues that in the long-run, the economy reaches a point where there is no growth in the per capital output and capital. At this point, the per capital output and the per capital are constant.

## Answer and Explanation: 1

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View this answerGiven the production function {eq}Y =F(K,AN) {/eq} which is a labor augmented production function, to get the per capita or the per worker production...

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