Homework Answers
A) China initialy will grow faster than South Korea, but each will have the same steady state.
This is because for China, at KCH the saving rate is more than the rate of depreciation. This means that China will save more than what is being depreciated. Capital accumulation will take place but only till the point where savings compensates depreciation. Both South Korea and China will end up being at the same steady state level.
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