3. Assume that an economy experiences both positive population growth (8x) and technological progress (8.). The capital depreciation rate is d. Once the economy has reached balanced growth, we know that the capital per effective worker ratio (K/AN) is growing at a rate ; the capital per worker ratio (K/N) is ; aggregate capital ; the level of growing at a rate stock (K) is growing at a rate investment per effective worker is

3. Assume that an economy experiences both positive population growth (8x) and technological progress (8.). The capital depreciation rate is d. Once the economy has reached balanced growth, we know that the capital per effective worker ratio (K/AN) is growing at a rate ; the capital per worker ratio (K/N) is ; aggregate capital ; the level of growing at a rate stock (K) is growing at a rate investment per effective worker is

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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41. Assume that a country's per-worker production is y=1.5k3/4, where y is output per worker and k is capital per worker. Assume also that 10 percent of capital depreciates per year and there is no population growth or technological change. a. If the saving rate (s) is 0.15, what are capital per worker, production per worker, and consumption per worker in the steady state? b. Solve for steady-state capital per worker, production per worker, and consumption per worker with s-0.3. c. Solve for steady-state capital per worker, production per worker, and consumption per worker with s-0.45. d. Is it possible to save too much? Why?
(5 points) Suppose that the marginal product of capital satisfies the following condition: lim fr = A > (8 + n)/s. 00 L Show this model in the context of the above Solow growth model. What does this imply about the existence of a steady state? Will growth in per-capita GDP be continual?
4.
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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: iv. growth rate of output per worker growth rate of output v. (b) Suppose that the saving rate increases. What is its short-run and the long-run effect on the growth rate of per-capita output?
5
Assume a Cobb-Douglas production with capital share 1/3; total factor productivity equal to 1, total population in an economy is equal to 1, depreciation rate is 5 percent and saving rate is 10 percent. Then the steady-state level of capital is about: 1.3 O b. 0.3 О с. 0.8 Od. 2.8 O e. 1.6
5. Suppose that the economy's production function is Y = √KVLA where K is capital, L is labor, and A is the state of technology. Suppose that the saving rate (s) is equal to 2.4%, the rate of depreciation of capital (6) is equal to 3%, the number of workers grow at 0.7% per year and the rate of technological progress is 3%. (a) Find the steady state values of: iv. v. growth rate of output growth rate of output per worker (b) Suppose that the growth rate of workers decreases. What is its short-run and the long-run effect on the growth rate of output per worker ?