1. Suppose the production is given by Y = 0.5 * K3 (AN) 3. Suppose the depreciation rate is 2%,number of workers grows at 2% per year and rate of technological progress is 3% per year.(a) If the saving rate is 14% then find the steady state values of capital per unit of effect worker andoutput per unit of effective worker.(b) Suppose the economy is at steady state with saving rate being equal to 14%. Now suppose thesavings rate increases to 15% from 14%. What will be the capital per unit of effective workerone year after the change in savings rate?Show your calculations for both (a) and (b).

According to Solow Model of Long Term growth an economy converges to a steady state equilibrium at…

Answered: 1. Suppose the production is given by Y…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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1 1 1. Assume that a country's production function is Y = K2L2. Assume there is no population growth or technological change What is labor productivity computed from the per-worker production function? Is this value the same as labor productivity computed from the original production function а. b. Assume that 10 percent of capital depreciates each year. What gross saving rate is necessary to make the given capital-labor ratio the steady-state capital-labor ratio? (Hint: In a steady state with no population growth or technological change, the saving rate multiplied by per-worker output must equal the depreciation rate multiplied by the capital-labor ratio.)
72) According to new growth theory, the accumulation of ________ capital is subject to diminishing returns at the ________ level, but not at the level of the economy as a whole. A) physical; firm B) technological; personal C) knowledge; firm D) physical; production 73) Because knowledge capital is nonexcludable and nonrival, firms have an incentive to ________ the research and development of other firms. A) make bids on B) not use C) ignore D) free ride on 74) When firms benefit from the results of research and development they didn't pay for, we say firms A) are litigious. B) free ride. C) invest in knowledge capital. D) maintain a level playing field. 75) For how long does a patent give a firm the exclusive legal right to a product? A) 10 years B) 17 years C) 20 years D) 50 years 76) A copyright grants the creator of a book, film, or piece of software exclusive legal rights to use the creation for how long? A) 10 years B)…
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e ncia.wwnorton.com b. Per capita real GDP doubled in South Korea again in only seven years, reaching $1600.00 by 1988.00. What was the average annual economic growth rate between 1981 and 1988.00? (NOTE: Round this to two places past the decimal point.) % 4th attempt 3rd attempt Okay Elizabeth 4 8 Q W E Y U P @ 23 & return A F G H J K % ! V N M .?123 .?123
4. If the production function is given by Y=K2L'3 and the saving rate saving rate (s) equals the depreciation rate (8). Find the numerical values of the steady state capital and output?
If an economy's GDP will double in 15 years, then its growth rate must be about: 7% 15% 10% 4.7%
18 If real GDP is 250 in Year 1 and 300 in Year 2, what is the growth rate of real GDP Group of answer choices 5% 20% 50% 16%
Q4) Production Functions and Growth (a) Time is continuous and the production function of the economy is given by (1) Y¢ = ( K¢ )ª( A¿N; )1-« Total factor productivity evolves according to (2) A = egt Ao such that A where the growth rate of technological progress g is exogenous. Population grows at an exogenous rate n according to (3) N{ = ent No with No = 1 such that = n Find an expression for the growth rate of (i) output per capita (Yt / Ni) and (ii) output per effective worker ( Yt/ (A:N:) ). When is the growth rate of (ii) equal to zero?
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if real GDP grows at an annual rate of 3.4% and the population grows at an annual rate of 1.6% then at approximately what rate is the real GDP per capital growing?
(a) Two countries, Country A and Country B, are described by the Solow growth model. Both countries are identical, except that the rate of labor-augmenting technological progress is higher in A than in B. i. In which country is the steady-state growth rate of output per effective worker higher? ii. Does the Solow growth model predict that the two economies will converge to the same steady state? p (b) Based on the Solow growth model with population growth and labor-augmenting technological progress, explain how each of the following policies would affect the steady-state level and steady-state growth rate of total output per person: i. an increase in the government's budget deficit poits) inis) ii. grants to support research and development (c) Consider a Solow model where the production function no longer exhibits diminishing returns to capital accumulation. Assume the production function is now Y = AK. What happens to the growth rate of per capita GDP over time? (6pints)
In this problem, we distinguish between labor and population in the Solow growth model. A proportion of the population, a, between zero and one, works. The production function is now written as Y = A(K^1/3)[(aL)^2/3] (a) How does an increase in a from 0.3 to 0.6 change steady state GDP? (b) Does it change the steady-state capital? Explain. (c) Suppose a rises steadily over time. How do you think would affect the growth rate of GDP?

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