2. An economy has a production function: Y 3KtLt. (1) The economy has a saving rate of 24 percent, a depreciation rate of 3 percent, 1 for all period (no population growth). and Lt Yt Lt (a) What is the per-worker production function, yt f(kt)? Define yt Ки Lt and kt (b) Find the equation for the evolution of capital per worker in terms of kt and kt+1 (c) Find the long-run growth rate of output per worker. Now the economy has the following production function: Y 3Kt (2) but savings rate, depreciation rate, and population remain the same Yt Lt f (kt)? Define yt (d) What is the per-worker production function, yt (e) Find the equation for the evolution of capital per worker in terms of kt and kt+1 (f) Find the long-run growth rate of output per worker. (g) Explain why the economy with production function (2) explain per- sistent growth without the assumption of exogenous technological progress. How does this differ from the economy with production func- tion (1)?

2. An economy has a production function: Y 3KtLt. (1) The economy has a saving rate of 24 percent, a depreciation rate of 3 percent, 1 for all period (no population growth). and Lt Yt Lt (a) What is the per-worker production function, yt f(kt)? Define yt Ки Lt and kt (b) Find the equation for the evolution of capital per worker in terms of kt and kt+1 (c) Find the long-run growth rate of output per worker. Now the economy has the following production function: Y 3Kt (2) but savings rate, depreciation rate, and population remain the same Yt Lt f (kt)? Define yt (d) What is the per-worker production function, yt (e) Find the equation for the evolution of capital per worker in terms of kt and kt+1 (f) Find the long-run growth rate of output per worker. (g) Explain why the economy with production function (2) explain per- sistent growth without the assumption of exogenous technological progress. How does this differ from the economy with production func- tion (1)?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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