Question 13 1 pts Notice this is a multiple answers question. Suppose there are

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Question 13 1 pts Notice this is a multiple answers question. Suppose there are two very similar countries (call them G and H). Both countries have the same population and both are experiencing population growth at the same rate (that is, N and 9N are identical in both countries). Both countries depreciate capital at the same rate, the both have the same savings rate, they both have the same technology, and technological progress happens at the same rate in both countries Suppose that currently both countries are in steady state, when an earthquake hits both countris. In country G it destroys half of the capital stock, but does not kill any of its population. In country H it kills half of the population, but it does not affect the country's capital stock. We would expect That Country G will experience a period of increase in capital per effective worker AN ) ) iod of increase in capital per effective worker That Country G will experience a period of decrease in capital per effective worker( AN That Country H will experience a period of decrease in capital per effective worker AN

Explanation / Answer

Tick mark: option 2 and option 3

In country G, half the capital stock (i.e. K) is destroyed. The capital stock will decline and hence there will be a decrease in (K/AN) of country G.
In country H, half the population is destroyed. Hence, Labor stock (N) will decline and with that (K/AN) will increase in country H.

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