2. Recall that general form of fundamental equation of growth in Solow model is described as follows: k = s f(k) – (gs + 5)ka Noting that at steady-s tate k s = 0 and hence %3D a Using the fact ksg= 0, show the steady-state graphically and provide econ omic interpretation of the steady-state condition s: f(k ss) = (gs + 6)k s b. Using the same graph you draw in part (a) explain the transitional dynamics of

2. Recall that general form of fundamental equation of growth in Solow model is described as follows: k = s f(k) – (gs + 5)ka Noting that at steady-s tate k s = 0 and hence %3D a Using the fact ksg= 0, show the steady-state graphically and provide econ omic interpretation of the steady-state condition s: f(k ss) = (gs + 6)k s b. Using the same graph you draw in part (a) explain the transitional dynamics of

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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I need assitance with part b) and d) answers are provided and arecorrect.
The economy grows 3.59 percent per year over a 20 year period. 0.67 percent per year is attributed to labor and 1.49 percent per year is attributed to capital. Therefore, enter your response here percent per year must be due to technological progress. (Enter your response rounded to two decimal places.)
See Figure 2.2 and examine the model. Unlike other circular flow models, this model is missing another sector/s. what is the missing sector?
Note: Hand written solution is not allowed.
2) Consider an economy with depreciation 6=.2, saving rate s = .1. Worker productivity grows at rate g = .1. The economy starts with 5 units of capital per worker. The productivity function is given by: 2tnioq S) m6x9 grit no bazzim 23 0 2 2 19 0 f(k) = 3* k1/3 (1916978 zi 19verlɔirlw how to two lapiolandotdwong noitsluqoq TUOHTIW lebom wolo2011 ( The Marginal Product of capital is therefore 100037950 1 ritwong ytivitoub 1910 190 stign .6 MPK = 3* know 19q gniv brs (19) a. Using the above parameters, what is the golden rule steady state capital per (effective) worker? Please show your work below.
Question 4
3. Assume that production function is Cobb- Douglas type, namely Yi = zika i N 1-a i (1) where i = 0, 1 indicates the two periods of the model. Derive the formula for the investment demand given the model parameters and other endogenous variables, like real wage and employment. Calculate al ad . How does the depreciation rate influence investment? Explain