4. The Production function is given by Y= AK1/2L1/2The economy initial level of capital stock is 60,000 billion dollars. The nominal interestrate is 4%, the inflation rate is 2% and the depreciation rate is 10% . The real price ofcapital is 3000.a) Calculate the value of the cost of capital.b) What is the current stock of capital and future stock of capital (next period) if thevalue of current production is equal to 20,000 and next year will be 22,000, assumingthat interest rates, inflation and depreciation stay constant.c) Calculate net and gross investment in both periods (current and future).

In economics, a production function is an equation that expresses the relationship between the…

Answered: 4. The Production function is given by…

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

4. If the production function is given by Y=K2L'3 and the saving rate saving rate (s) equals the depreciation rate (8). Find the numerical values of the steady state capital and output?
In the event of strong economic growth in China which relationship/s will be affected? Short Run Aggregate Supply Investment Demand Long Run Aggregate Supply Aggregate Demand Regarding the question above, describe short run result of the change? Price level increases and real gross domestic product increases. Price level decreases and real gross domestic product decreases. Price level decreases and real gross domestic product increases. Price level increases and real gross domestic product decreases.
81
A5
I am stuck on this one
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?
For this question, assume that all price levels are fixed. Now suppose that there is a real depreciation. This real depreciation will cause which of the following to occur? Question 4Answer a. None of the answers b. a reduction in exports c. an increase in imports d. a reduction in net exports e. a reduction in demand for domestic output
Table 1 Table 1 shows the labor market schedule and Table 2 shows the production function schedule for the country of Moldovokia. Real wage rate Quantity of labor Quantity of labor demanded supplied What is potential GDP if a decrease in the population changes the quantity of labor supplied by 20 billion hours at each real wage rate? (2012 dollars per hour) 15 (billions of hours per year) 20 60 20 50 30 Potential GDP is $ trillion. 25 40 40 30 30 50 35 20 60 Table 2 Labor Real GDP (trillions of 2012 dollars) 2.0 (billions of hours per year) 20 30 2.7 40 3.2 50 3.5 60 3.6 Enter your answer in the answer box. ? MacBook Air esc 80 000 000 DII DD F1 F2 F3 F4 F5 F6 F7 F8 F9 F10 F11 F12 2$ & * 1 2 3 7 8 delete Q W E Y U { [ A S F G %3D K L D.
5 Question This question is supposed to familiarize you with the calculation of growth over multiple periods. In the lectures you learned that the growth rate of a variable from one period to the next is given by Yt - Yt-1 9y= Yt-1 where g, denotes the growth rate, y, the value of the variable y in period t, and yt-1 the value of the same variable in period t- 1. Very often we are dealing with growth over many periods, say 50 years, in which case the above formula is not helpful. In that case we use the following formula: Yt = Yo (1+9y), where yo is the value of the variable at the beginning of the period, y, is the value of the variable after t periods, and g, is the (constant) growth rate. Depending on what information is given, you can solve the formula for either yt, Yo, gy, or for t. Now turn to the actual problem: The poorest countries in the world currently have an annual per capita income of about $600. We can reasonably assume that it is nearly impossible to live on an income…
Xw
Depreciation a. does not change the amount of capital in the economy. b. is the decrease in the capital stock because of wear and tear. c. is also known as capital consumption. d. Both answers is the decrease in the capital stock because of wear and tear and is also known as capital consumption are correct.
6. Using the Solow Model, determine graphically, the steady state for capital and output when there is an: (a) a permanent decrease in the savings rate (b) a permanent decrease in A (c) a permanent increase in the depreciation rate.

SEE MORE QUESTIONS

Recommended textbooks for you

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

ENGR.ECONOMIC ANALYSIS

Economics

ISBN:

9780190931919

Author:

NEWNAN

Publisher:

Oxford University Press

Principles of Economics (12th Edition)

Economics

ISBN:

9780134078779

Author:

Karl E. Case, Ray C. Fair, Sharon E. Oster

Publisher:

PEARSON

Engineering Economy (17th Edition)

Economics

ISBN:

9780134870069

Author:

William G. Sullivan, Elin M. Wicks, C. Patrick Koelling

Publisher:

PEARSON

Principles of Economics (MindTap Course List)

Economics

ISBN:

9781305585126

Author:

N. Gregory Mankiw

Publisher:

Cengage Learning

Managerial Economics: A Problem Solving Approach

Economics

ISBN:

9781337106665

Author:

Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:

Cengage Learning

Managerial Economics & Business Strategy (Mcgraw-…

Economics

ISBN:

9781259290619

Author:

Michael Baye, Jeff Prince

Publisher:

McGraw-Hill Education

SEE MORE TEXTBOOKS