1 11. Assume that a country's production function is Y = K2L2. Assume there is no populationgrowth or technological change= f(k)?b. Assume that 10 percent of capital depreciates each year. What gross saving rate is necessary toWhat is the per-worker production function yа.make the given capital-labor ratio the steady-state capital-labor ratio? (Hint: In a steady statewith no population growth or technological change, the saving rate multiplied by per-workeroutput must equal the depreciation rate multiplied by the capital-labor ratio.)(Ctrl) -

"Steady state refers to the economy that has a stable population and consumption." In this economy,…

11 1. Assume that a country's production function is Y = KāLĒ. Assume there is no population growth or technological change a. What is the per-worker production function y = f(k)? 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.)

11 1. Assume that a country's production function is Y = KāLĒ. Assume there is no population growth or technological change a. What is the per-worker production function y = f(k)? 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.)

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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J 7 Given a production function Yt = AKt1 /3L2 /3 , if K0=8, A = 2, L = 4, s = 0.2, and d = 0.05: (a) Calculate the steady-state level of capital and output. (b) Calculate K1 , I 1 , Y1 and C1 .
7. Suppose that the economy's production function is Y = √K√LA where K is capital, L is labor, and A is the state of technology. Suppose that the saving rate (s) is equal to 6%, the rate of depreciation of capital (8) is equal to 5%, the number of workers grow at 5% per year and the rate of technological progress is 4%. (a) Find the steady state values of: i. 11. iii. capital stock per effective worker output per effective worker growth rate of output per effective worker
answer questions a and b please
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1. (This is problem 3, page 238 of the textbook.) For a particular economy, the following capital input K and labor input N were reported in four different years: Year 1 234 4 K 200 250 250 300 N 1000 1000 1250 1200 The production function in this economy is Y=K0.3 Nº.7, where Y is total output. a. Find total output, the capital-labor ratio, and output per worker in each year. Compare year 1 with year 3 and year 2 with year 4. Can this production function be written in per-worker form? If so, write algebraically the per- worker form of the production function. b. Repeat Part (a) but assume now that the production function is Y = Kº.3 Nº.8
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3) Suppose your per capita production function is given as y = k". Capital evolves according to the expression Ak = sy – (n +d)k, and your consumption function is c = (1– s)y. As usual, s is the savings rate, n is the - population growth rate and d is the capital depreciation rate. Imagine a foreign government decides to grant your country an investment subsidy in the form of b, which represents a constant fraction of domestic investment per capita (ia) such that irotal = ia + bia. In per capita terms the expenditure function with the subsidy is y = c + itotal and it is y = c + ia without the subsidy. a) Derive an expression for the steady state capital stock after the subsidy is granted. (Hint: Use the expenditure function with the subsidy to solve for sy then use the expenditure function without the subsidy to solve for domestic investment ia.) b) Use the Solow diagram to show living standards before and after the subsidy is granted. Explain the dynamic process towards the new steady…
Consider a closed economy in which the population grows at the rate of 1% per year. The per-worker production function is yt = 2.2kt^0.5, where y is output per worker and k is capital per worker. The depreciation rate of capital is 10% per year a- Households initially consume 80% of income and save the remaining 20% of income. There is no government spending. What are the steady-state values of capital per worker, output per worker, consumption per worker, and investment per worker? b-Suppose saving rate decreases to 10% permanently. What are the steady-state values of capital per worker, output per worker, consumption per worker, and investment per worker?
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.)
10. At the current steady state capital-labor ratio, assume that the steady state level of per capita consumption, (C/N)*, is less than the golden rule level of steady state per capita consumption. Given this information, we can be certain that A. an increase in the saving rate will cause an increase in (C/N)*. B. a reduction in the capital-labor ratio will cause a reduction in (C/N)*. C. the capital labor ratio will tend to increase over time. D. a reduction in the saving rate may have an ambiguous effect on (C/N)*.
20) Suppose that the production function is y = k0.25[that is, output per worker is equal to the (1/4th) root of capital per worker], s = 0.36, and lowercase delta (5)[the depreciation rate] = 0.10 and the population growth is 2 percent (n = 0.02). What is (approximately) the per capita steady state %3D consumption in this economy? Select one: а. 5004 b. 1.45 С. 302 d. 0.92
3. Y₁ = 3k+0.5 St = 0.3Yt d = 0.1 n = 0.05 What are the steady-state values of the capital-labor ratio k, output per worker y, and consumption per worker?