Consider a closed economy in which the population grows at the rate of 2% per year. The per-worker production function is given as: y = 10/k, where y is output per worker and k is capital per worker. The depreciation rate of capital is 73.00% per year. Suppose that households consume 70% of income and save the remaining 30%. There is no government. (Enter all responses as integers or decimals rounded to one place as appropriate.) What is the steady-state value of capital per worker? k = What is the steady-state value of output per worker? y = What is the steady-state value of consumption per worker? c = What is the steady-state value of investment per worker? i= Suppose that the economy now wanted to increase its steady-state level of output per worker. If the economy wanted to double the level of output per worker (from 40 to 80), what is the level of capital per worker, k, needed? What fraction of income would households have to save in order to increase the level of capital per worker to achieve this increase in output? (Enter your response as a decimal rounded up to three places as appropriate).

Consider a closed economy in which the population grows at the rate of 2% per year. The per-worker production function is given as: y = 10/k, where y is output per worker and k is capital per worker. The depreciation rate of capital is 73.00% per year. Suppose that households consume 70% of income and save the remaining 30%. There is no government. (Enter all responses as integers or decimals rounded to one place as appropriate.) What is the steady-state value of capital per worker? k = What is the steady-state value of output per worker? y = What is the steady-state value of consumption per worker? c = What is the steady-state value of investment per worker? i= Suppose that the economy now wanted to increase its steady-state level of output per worker. If the economy wanted to double the level of output per worker (from 40 to 80), what is the level of capital per worker, k, needed? What fraction of income would households have to save in order to increase the level of capital per worker to achieve this increase in output? (Enter your response as a decimal rounded up to three places as appropriate).

Economics:

10th Edition

ISBN:9781285859460

Author:BOYES, William

Publisher:BOYES, William

Chapter16: Economic Growth

Section: Chapter Questions

Problem 2E

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Question

Consider a closed economy in which the population grows at the rate of 2% per year. The per-worker production function is given as:
y = 10/k,
%3D
where y is output per worker and k is capital per worker. The depreciation rate of capital is 73.00% per year.
Suppose that households consume 70% of income and save the remaining 30%. There is no government. (Enter all responses as integers or decimals rounded to one place as appropriate.)
What is the steady-state value of capital per worker? k =
What is the steady-state value of output per worker? y =
What is the steady-state value of consumption per worker? c =
What is the steady-state value of investment per worker? i=
Suppose that the economy now wanted to increase its steady-state level of output per worker.
If the economy wanted to double the level of output per worker (from 40 to 80), what is the level of capital per worker, k, needed?
What fraction of income would households have to save in order to increase the level of capital per worker to achieve this increase in output?
(Enter your response as a decimal rounded up to three
places as appropriate).

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