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2. Consider the Solow growth model. Suppose that the production function is constant returns to scale and it is explicitly gic. On a Solow diagram show the steady state levels of k, y, c and i. d. Assume that the country is in its steady state. Expla3. The table below shows a Markov matrix for the income levels of 40 countries over two centuries: Poor in 20th CE Rich in 20

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Y=ka l-a A) jie output per calita. A) find ya E y = r = KOL K (4) L La L os B) Change in in capital stock - Investment: – De8 guvestment Depreciation (81) Depreciation 2 = Sk Luvestment ( s fm) k capital per works Steady state consumption is the dif

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