1.B Suppose the capital share in New Zealand is a = 3/5. Mark ALL of the CORRECT statements. For this question, use the growth accounting formula given in class. a) If capital increases by 5%, labor hours increase by 15%, and total output increases by 10% relative to last year, then TFP should increase by 1%. b) If capital increases by 15%, labor hours decrease by 10%, and TFP increases by 5% relative to last year, then total output should increase by 5%. c) If capital increases by 10%, TFP increases by 5%, and total output increases by 10% relative to last year, then labor hours should decrease by 1%. d) If labor hours increase by 5%, TFP increases by 5%, and total output increases by 10% relative to last year, then capital should increase by 5%. e) None of the above.

1.B Suppose the capital share in New Zealand is a = 3/5. Mark ALL of the CORRECT statements. For this question, use the growth accounting formula given in class. a) If capital increases by 5%, labor hours increase by 15%, and total output increases by 10% relative to last year, then TFP should increase by 1%. b) If capital increases by 15%, labor hours decrease by 10%, and TFP increases by 5% relative to last year, then total output should increase by 5%. c) If capital increases by 10%, TFP increases by 5%, and total output increases by 10% relative to last year, then labor hours should decrease by 1%. d) If labor hours increase by 5%, TFP increases by 5%, and total output increases by 10% relative to last year, then capital should increase by 5%. e) None of the above.

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter20: Economic Growth In The Global Economy

Section: Chapter Questions

Problem 3P

See similar textbooks

Similar questions

Can you help me with this question please. Thank you! All help is hugely appreciated.
Population Growth and Technological Progress – Work It Out PLEASE WRITE ANSWERS CLEARLY An economy has a Cobb-Douglas production function: Y = K“(LE)'-a The economy has a capital share of 0.30, a saving rate of 42 percent, a depreciation rate of 4.00 percent, a rate of population growth of 5.25 percent, and a rate of labor-augmenting technological change of 3.5 percent. It is in steady state. b. Solve for capital per effective worker (k*), output per effective worker (y*), and the marginal product of capital. k* = y* = marginal product of capital =
Exercise 4: Growth and capital over-accumulation = Suppose two countries, A and B, with the same production function Y KaL¹-a. The value of a is 0.30, the growth rate of population is 2% and the depreciation rate is 5%. a) Show that with price-taking firms the share of labor must be 1 a. b) Compute the stock of capital, output and consumption per unit of labor in the steady state if the savings rates were 25% for country A and 35% for country B. c) Compare both economies to the Golden Rule. d) Explain what would happen to both countries if suddenly their savings rate became the Golden Rule savings rate.
An economy's production function as follows Y = 8 (K)¹/2 (EL)¹/2 If depreciation rate is 10%, population growth rate is 4%, tech progress grows 6%, and saving rate is 20%. a. b. C. d. e. f. Write production function in term of per effective worker variables. Find steady state capital per effective worker, output per effective worker, consumption per effective worker, investment per effective worker. Find growth rate of capital per worker and output per worker at steady state. Find growth rate of capital stock and total output at steady state. Propose policies to encourage long run growth of total output and living standard? Draw relevant graph for the above questions.
Exercise 4: Growth and capital over-accumulationSuppose two countries, A and B, with the same production function Y = KαL1−α. Thevalue of α is 0.30, the growth rate of population is 2% and the depreciation rate is 5%.a) Show that with price-taking firms the share of labor must be 1 − α.b) Compute the stock of capital, output and consumption per unit of labor in the steadystate if the savings rates were 25% for country A and 35% for country B.c) Compare both economies to the Golden Rule.d) Explain what would happen to both countries if suddenly their savings rate becamethe Golden Rule savings rate.
Mj
Population Growth and Technological Progress-Work It Out An economy has a Cobb-Douglas production function: Y = K (LE)¹- The economy has a capital share of 0.20, a saving rate of 49 percent, a depreciation rate of 4.00 percent, a rate of population growth of 1.50 percent, and a rate of labor-augmenting technological change of 4.0 percent. It is in steady state. a. At what rates do total output and output per worker grow? Total output growth rate: Output per effective worker is constant in the steady state and does not change. increases in the steady state. declines in the steady state. % Output per worker growth rate: %
7. A country's GDP is expected to grow at a constant rate of 3%, and population grows at rate of 2%. Productivity grows at rate of 1%, and capital share is 1/2. Approximately how many years would it take for a country's per capita income to double? Assume population is equal to labor force, and the production function is Y = AK L'-a. a) 14 b) 23 c) 35 d) 70
If an economy annual real GDP growth rate reduces from 8.2 percentage, its real GDP doubling time will.......... A) reduce by 3.53 year B) increase by 8.4 year C) reduce by 9.3 year D) increase by 18.5 year
5) Suppose that an economy starts off with a per capita real GDP of $5,000. How large will the per capita GDP of this country be if it grows at an annual rate of 6% for 40 years? Use compound growth rate formula. Show your calculations and the unit of account of your answer. Answer: 6) The graph below represents per-worker production functions for the same country. Answer the following questions using this graph. Real GDP per hour worked, Y/L $17,000 16,400 16,000 15,000 Production function3 B Production function2 E Production function1 a) Answer: $50,000 60,000 70,000 Capital per hour worked, K/L Which concept is illustrated by the movement from point A to B or from point B to C?
Economic Growth II- Work It Out Question 1 An economy has a Cobb-Douglas production function: Y = K (LE)¹- The economy has a capital share of 0.35, a saving rate of 45 percent, a depreciation rate of 5.00 percent, a rate of population growth of 5.50 percent, and a rate of labor- augmenting technological change of 4.0 percent. It is in steady state. c. The economy has capital than at the Golden Rule steady state. To achieve the Golden Rule steady state, the saving rate needs to d. Suppose the change in the saving rate you described in part c occurs. During the transition to the Golden Rule steady state, the growth rate of output per worker will be the rate you derived in part a. After the economy reaches its new steady state, the growth rate of output per worker will be
Question One. Answer the following pertaining to the growth theories. a) Derive the elasticity of the balanced-growth-path level of output with respect to savings rate. b) The Romer growth model assumed that growth rates if capital and knowledge are endogenously determined. Derive the growth rates of capital and knowledge. I want a answer in 15 min