Answer :
Final answer:
The question addresses key economic growth concepts focusing on steady-state values in a balanced-growth economy. It underlines the importance of understanding how the capital-labor ratio, output per worker, and consumption per worker react to changes in investment rates, technology, and government policies. The answer explains these concepts and their significance in determining long-term economic conditions.
Explanation:
The question revolves around understanding key concepts related to economic growth, specifically focusing on steady-state values such as the capital-labor ratio, output per worker, and consumption per worker in a balanced-growth economy. The steady-state values determine the long-term national savings, investment, and consumption patterns under given conditions of workforce and human capital growth, depreciation rates, and changes in technology and government policies.
In a balanced-growth economy, the capital-labor ratio stabilizes when the savings rate, depreciation rate, and growth rates of technology and the workforce are constant. The output per worker equals the level of technology multiplied by the capital-labor ratio raised to the power of capital's share in output. Lastly, consumption per worker is determined by the difference between output per worker and savings per worker, reflecting the trade-off between current consumption and future investment.
Regarding specific equations or values given in the scenario, such as the balanced-growth formula or the impact of changes in investment rates or technology on output per worker, they illustrate the sensitivity of the economy's long-run equilibrium to these variables. The calculations show how adjustments in investment rates, technological advancement, and government policy can shift the balanced growth path, influencing the steady-state levels of capital, output, and consumption per worker.
