I have two questions on my assignment that I was not able to finish,
1. Productivity growth in Germany is higher than in Greece, the exchange rates on these two countries are fixed with no ability for adjustment, and their economies are liked by the Euro. With technology, goods can be made at a cheaper cost, so, therefore, the productivity growth will have falling price levels/ Why will the imbalance in productivity growth rates have problems with the exchange rate and the stability of the euro.
2. Over the centuries after the plague, output and capital per worker started to rise. Referring again to a suitable diagram, explain the impact of an increase in technology (consider in the first instance a single step increase). The slope of the output-per-worker line is the return to an additional unit of capital per worker. If the return on capital is constant over time, explain why technological change causes capital investment. Support your answer with a suitable diagram.
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