You are asked to make comparisons of two pairs of countries. The first pair are the Latin American countries of Chile and Argentina; the second pair are France and Germany. You are given the following information:
The average saving rate in Argentina is 23.3 percent, in Chile it is 28.7percent, in France it is 21.1 percent, and in Germany, 20.8 percent.
(a) Assuming the countries are identical in every other way, which country would the Solow model predict to have the higher per capita real GDP?
(b) You find out the steady state real per capita GDP in each of the countries is $13, 300 in Argentina, $12, 500 in Chile, $31,300 in France, and $34,000 in Germany. What is the primary factor that the simple Solow model uses to describe these differences? Give an example

Part a: According to Solow model higher per capita real GDP will be in Chile because of its highest saving rate.

Part b: The per capita capital stock or the labour ratio is the primary factor for these differences in the simple Solow model.

Explanation:

Part a:

According to Solow model higher per capita real GDP will be in Chile because of its highest saving rate.

In Solow model the GDP per capita is defined as

Also the steady state path is given as

As all other parameters are same thus the country with higher value of s will have a higher per capita GDP.

According to the Solow model, higher saving rate means larger capital stock and high level of output at the steady state.

Higher saving rate leads to faster growth in Solow model. So there is higher per capita real GDP for the country that has higher saving rate.

Part b:

In Simple Solow Model, the steady state per Capita GDP, is the function of the steady state per capita capital stock given as

Now this indicates that

where f is an increasing concave function i.e. f'>0 and f''<0

Thus the sole dependence of per capita GDP is on per capita capital stock.

Thus the per capita capital stock or the labour ratio is the primary factor for these differences in the simple Solow model.

anyone below or above ambitious can tell you. so crowns mean brainliest. getting brainliest means your answer needs a good explanation and the person asking the question can understand your answer easily. so say there's a multiple choice question. you don't just want to say your answer is a, hope it . provide evidence and reasoning so that they know that that is the correct answer. a good explanation should have evidence, good reasoning, and your opinion on why you picked that. you don't want to look up their question on the internet and see if you can answer it. pick questions that you 100% know the answer to, so than that way you can provide a better explanation.

best of luck,

the divergent