Devastating hurricane hits the economy destroying

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Reference no: EM13800504

Suppose that the US in a steady state and that capital per worker in the US is equal to k*=10. The following picture shows the steady state of the US economy

1.Suppose a devastating hurricane hits the economy destroying 10 % of the capital stock so that capital per worker after the hurricane is k=9. In this economy, the new steady state after the hurricane hits will have a stock of capital per worker, k* equal to?

2. Also does the hurricane effect the US economy in: a) both short and long run; or b) in the short run but not in the long run

Reference no: EM13800504

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