Answer :
Final Answer:
The path of capital per worker decreases in the first period after the change in the depreciation rate. The output per worker also decreases in the first period after the change in the depreciation rate.
Explanation:
In the first step, we observe that the capital per worker decreases in the initial period following the change in the depreciation rate. This is because a higher depreciation rate leads to a faster reduction in the capital stock per worker, as a larger portion of the capital is being "used up" in each period.
In the second step, we note that the output per worker also decreases in the first period after the change in depreciation rate. This decrease is a consequence of the reduced capital per worker, as lower capital results in less productive capacity, which, in turn, leads to a decrease in output per worker.
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