What gross saving rate is necessary to make the given capital-labor ratio.....

Economics
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Assume that 10 percent of capital depreciates each year. What gross saving rate is necessary to make the given capital–labor ratio the steady-state capital–labor ratio?

Assume that a country's production function is Y = K1/2L1/2.

Assume that the country possesses 40,000 units of capital and 10,000 units of labor.

May 14th, 2015
In a steady state with no population growth or technological change, the savingss rate multiplied by per worker output must equal the depreciation rate multiplied by the capital-labor ratio.
by using formula
ans. s=0.2


May 14th, 2015

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May 14th, 2015
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