Question 4Consider the following model of economic growth:Yt=AtLyt(1) Δ At=z‾AtLt(2) L‾=Lyt+Lat(3) Lat=l‾L‾(4)
- If A 0 =100 , l ‾ =0.1 , z ‾ =1/3000 , and L ‾ =1,000 , what is the growth rate of knowledge in this economy?
- What is the growth rate of per capita output in this economy?
- Using the information from year 1, what is the level of per capita output in this economy in year 5?
- If the percentage of the population engaged in ideas formation and l ‾ decrease, what are the short- and long-term impacts of this shift?
- Consider the data from table#. Total R&D/GNP is the share of research and development to gross national product share. Define the percentage of science and engineering students as representation of in the above model. All things ( L ‾ , z ‾ , A 0 ) being equal across all countries, which country does the model predict will grow the fastest? Explain.