What are the very long run annual growth rates of aggregate

Reference no: EM133530441

Question: Suppose instead the closed economy has an aggregate production function given by the following expression 50.050.0)(15ExLKY is experiencing an annual population and labour force growth rate of 2.5%, the effectiveness of labour (E) is growing by 2.5% annually, each year 15% of their capital depreciates and the economy has a saving rate equal to 20%. Use the growth accounting relationship to write down an expression for the annual growth rate of real output in the very long-run and use this expression to determine this growth rate. What are the very long run annual growth rates of aggregate real capital and consumption equal to?

c) Continuing with the economy from part B, what is the annual growth rate of output per worker equal to in the very long run equilibrium? When is this growth rate maximized? Explain.

Reference no: EM133530441

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