1. Draw two production functions ( y=A k^a) for Germany or Madagascar on the same graph, label the functionsand both axis. Indicate the relative levels of k and y for eachcountry on your graphs....

1. Draw two production functions
(


y=A


k^a)
for Germany or Madagascar on the same graph, label the functionsand both axis. Indicate the relative levels of k and y for eachcountry on your graphs. Answer the following questions: a. Which country has higher TFP? Why? How is this reflected onyour graph? b. Which country has higher capital intensity? Why? How is thisreflected on your graph? c. Which country has higher labor productivity? How is thisreflected on your graph? What factors can be contributing tothat? 2. Draw equilibrium in Solow growth model. Assume an exogenousshift – an increase in savings rate. a. Demonstrate the old and the new steady states b. Demonstrate the transition to new steady state c. Would there be growth in output per worker once the newsteady state is reached? Why or why not? 3. What does Solow growth model predicts about incomeconvergence? What is the intuition for this result? Does the datasupport this prediction? . . .