Consider the following model of economic growthytatlyt1

Question

Consider the following model of economic growth:Yt=AtLyt(1) Δ At=z‾AtLt(2) L‾=Lyt+Lat(3) Lat=l‾L‾(4)

1. If A 0 =100 , l ‾ =0.1 , z ‾ =1/3000 , and L ‾ =1,000 , what is the growth rate of knowledge in this economy?
2. What is the growth rate of per capita output in this economy?
3. Using the information from year 1, what is the level of per capita output in this economy in year 5?
4. If the percentage of the population engaged in ideas formation and l ‾ decrease, what are the short- and long-term impacts of this shift?
5. 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.