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

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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.)
1. Suppose an economy experiences both positive population growth (8 ) and technological progress (84 ). The capital depreciation rate is d . The saving rate is exogenously given as s. (a) Draw a diagram with variables in per effective worker terms to show how a steady state level of capital per effective worker (K/AN) is determined. Also explain your answers in words. (b) We further assume that the aggregate production function is given by Y= K“(AN)™, where o
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)…
(A)The share of labor income in U.S GDP is stable over time at (a) 10 percent of GDP (b) 90 percent of GDP (c) One third of GDP (d) Two thirds of GDP (e) none of the above (B) The principle of transition dynamics says that China should (a) Grow faster than the U.s until it gets close to its steady state (b) Pass U.S income per capita (c) avoid inflation
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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%
Assume the rate of technological progress is constant in a SSGM with Cobb- Douglas production function. Show that a steady-state cannot be identifiede if the technological progress is capital augmented, i.e. F(K, L) = [A(t)K(t)]*L(t)'_ª, where A(t) is the efficiency term growinge with a constant rate g.t
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?
Problem 1: Solow On a new sheet of paper show the work for each question. Suppose the economy of an island behaves as the Solow model, version 1.0 (constant population). The production function is Cobb-Douglas (with constant returns to scale) and the exponent on capital is 0.4. Further, the productivity parameter is 50 (A), the depreciation rate is 10% (d), the savings (investment) rate is 20% (s), and the labor force (L) is equal to 50 million (and constant over time).

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