# Image transcription text 3. Plot the following scenarios for per capita GDP on a ratio scale. Assume that per capita GDP in the year 2020

Image transcription text 3. Plot the following scenarios for per capita GDP on a ratio scale. Assume that per

capita GDP in the year 2020 is equal to $1,000. Use the Rule of 70 to label the value of

per capita GDP on the graph in the year listed below. (a) (10 points) Per capita GDP grows at 7% per year between 2020 and 2030, speeds

up to 10% per year for the next 14 years. (b) (10 points) Per capita GDP grows at 14% per year for 10 years and then slows down

to 0% per year for the next 20 years. 4. Consider the following version of a model of production. Suppose the production

function at the core of our model is given by Y = Abar L (so labor is the only input; there is no

capital in this model). Assume that the supply of labor is given exogenously by Lbar. (a) (10 points) State the three equations and three unknowns of this model.

(b)( (c) (5 points) What is the solution for the equilibrium level of output per person?

(d) (5 points) Suppose there is an exogenous decrease in Lbar. Does total output 10 points) Now solve these equations to get the solution of the model. increase, decrease, or stay constant? Does wage rate increase, decrease, or stay

constant? Explain.

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