26. Dynamics of capital and output per effective worker

Interacting with graphs to learn more about the dynamics of capital per effective worker and output per effective worker

There are many dynamic adjustments that go on in an economy. One is the adjustment of capital and output towards the long-run equilibrium. In this exercise, we′ll look at how capital per effective worker changes and how this drives the economy towards the long-run equilibrium.

Objectives

• Identify the long-run equilibrium level of capital per effective worker

• Examine the dynamic adjustment of capital per effective worker towards the long-run equilibrium

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