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5. Consider the Solow growth model with no population growth and no tech- nology growth, i.e., n = x = 0. Output is created by a Cobb-Douglas pro- duction function combining Labor, Lt, and capital, Kt, such that output Yt is given by Y₁ = At Ko La = = = 2. Ao and assume Recall that, without population growth, L₁ = Lo and assume that Lo Furthermore, recall that, without technology growth, At that Ao = 1. Assume that the savings rate is s rate is 8: 0.15, and that the capital share is a = letter denotes a variable in per capita. For example, kt = 0.4, the depreciation 0.3. A lower case = Kt/Lt. In the following questions, choose the closest number. What is the value of kss? (a) 40.6 (b) 4.1 (c) 2.8 (d) 28 6. What is the value of Ys for the economy described in Question 5 (a) 30.5 (b) 1.03 (c) 3.05 (d) 10.3 9. Now consider growth, Suppose that x = 0.05 and that n = 0.03, i.e., A₁ = (1+0.05) At−1, and L₁ = (1 + 0.03) Lt−1· The other parameters are same as in Question 5. what is capital per efficiency units in steady state? (a) 1.91 (b) 2.03 (c) 1.3 (d) 1.05 10. The capital share in Mexico is a = 1/3. Relative to last year, output increased by 20%, capital increased by 10%, and total factor productivitity increased by 5%. Which is the closest approximation for the growth in the labor force, L? (a) -3% (b) 10% c) 17.5% (d) 0%

5. Consider the Solow growth model with no population growth and no tech- nology growth, i.e., n = x = 0. Output is created by a Cobb-Douglas pro- duction function combining Labor, Lt, and capital, Kt, such that output Yt is given by Y₁ = At Ko La = = = 2. Ao and assume Recall that, without population growth, L₁ = Lo and assume that Lo Furthermore, recall that, without technology growth, At that Ao = 1. Assume that the savings rate is s rate is 8: 0.15, and that the capital share is a = letter denotes a variable in per capita. For example, kt = 0.4, the depreciation 0.3. A lower case = Kt/Lt. In the following questions, choose the closest number. What is the value of kss? (a) 40.6 (b) 4.1 (c) 2.8 (d) 28 6. What is the value of Ys for the economy described in Question 5 (a) 30.5 (b) 1.03 (c) 3.05 (d) 10.3 9. Now consider growth, Suppose that x = 0.05 and that n = 0.03, i.e., A₁ = (1+0.05) At−1, and L₁ = (1 + 0.03) Lt−1· The other parameters are same as in Question 5. what is capital per efficiency units in steady state? (a) 1.91 (b) 2.03 (c) 1.3 (d) 1.05 10. The capital share in Mexico is a = 1/3. Relative to last year, output increased by 20%, capital increased by 10%, and total factor productivitity increased by 5%. Which is the closest approximation for the growth in the labor force, L? (a) -3% (b) 10% c) 17.5% (d) 0%

Principles of Economics 2e
Principles of Economics 2e
2nd Edition
ISBN:9781947172364
Author:Steven A. Greenlaw; David Shapiro
Publisher:Steven A. Greenlaw; David Shapiro
Chapter20: Economic Growth
Section: Chapter Questions
Problem 11SCQ: Would you expect capital deepening to result in diminished1etmns? Why or why not? Would you expect...
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5. Consider the Solow growth model with no population growth and no tech- nology growth, i.e., n = x = 0. Output is created by a Cobb-Douglas pro- duction function combining Labor, Lt, and capital, Kt, such that output Yt is given by Y₁ = At Ko La = = = 2. Ao and assume Recall that, without population growth, L₁ = Lo and assume that Lo Furthermore, recall that, without technology growth, At that Ao = 1. Assume that the savings rate is s rate is 8: 0.15, and that the capital share is a = letter denotes a variable in per capita. For example, kt = 0.4, the depreciation 0.3. A lower case = Kt/Lt. In the following questions, choose the closest number. What is the value of kss? (a) 40.6 (b) 4.1 (c) 2.8 (d) 28 6. What is the value of Ys for the economy described in Question 5 (a) 30.5 (b) 1.03 (c) 3.05 (d) 10.3
Transcribed Image Text:5. Consider the Solow growth model with no population growth and no tech- nology growth, i.e., n = x = 0. Output is created by a Cobb-Douglas pro- duction function combining Labor, Lt, and capital, Kt, such that output Yt is given by Y₁ = At Ko La = = = 2. Ao and assume Recall that, without population growth, L₁ = Lo and assume that Lo Furthermore, recall that, without technology growth, At that Ao = 1. Assume that the savings rate is s rate is 8: 0.15, and that the capital share is a = letter denotes a variable in per capita. For example, kt = 0.4, the depreciation 0.3. A lower case = Kt/Lt. In the following questions, choose the closest number. What is the value of kss? (a) 40.6 (b) 4.1 (c) 2.8 (d) 28 6. What is the value of Ys for the economy described in Question 5 (a) 30.5 (b) 1.03 (c) 3.05 (d) 10.3
9. Now consider growth, Suppose that x = 0.05 and that n = 0.03, i.e., A₁ = (1+0.05) At−1, and L₁ = (1 + 0.03) Lt−1· The other parameters are same as in Question 5. what is capital per efficiency units in steady state? (a) 1.91 (b) 2.03 (c) 1.3 (d) 1.05 10. The capital share in Mexico is a = 1/3. Relative to last year, output increased by 20%, capital increased by 10%, and total factor productivitity increased by 5%. Which is the closest approximation for the growth in the labor force, L? (a) -3% (b) 10% c) 17.5% (d) 0%
Transcribed Image Text:9. Now consider growth, Suppose that x = 0.05 and that n = 0.03, i.e., A₁ = (1+0.05) At−1, and L₁ = (1 + 0.03) Lt−1· The other parameters are same as in Question 5. what is capital per efficiency units in steady state? (a) 1.91 (b) 2.03 (c) 1.3 (d) 1.05 10. The capital share in Mexico is a = 1/3. Relative to last year, output increased by 20%, capital increased by 10%, and total factor productivitity increased by 5%. Which is the closest approximation for the growth in the labor force, L? (a) -3% (b) 10% c) 17.5% (d) 0%
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