Consider a Solow growth model with the formulation investment = 0.192√/K Y = 0.384√K, Where 6 is the rate of depreciation, K is level of capital, and Y is the level of output. Adjust the line labeled Depreciation and the function labeled Investment to be consistent with the given model. 8 = 0.0175
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- Consider a Solow growth model with the formulation investment = 0.192√/K Y = 0.384√/K, Where & is the rate of depreciation, K is level of capital, and Y is the level of output. Adjust the line labeled Depreciation and the function labeled Investment to be consistent with the given model. 8 = Investment, depreciation, and output 5.0 4.5 4.0 3.5 3.0 2.5 2.0 1.5 1.0 05 0.0175 0.0 0 20 40 What is the steady-state level of capital? steady-state level of capital: 60 80 100 120 140 160 Capital (K) steady-state output: Depreciation Show Transcribed Text What is the steady-state output? vestment 160 160 200Consider a Solow–Swan model with saving rate s = 0.4, labour force growth gL = 0.05, constant productivity A = 1, and depreciation ?δ = 0.05. If output per worker is y = Y/L = 200 and capital per worker is k = K/L = 1000, which of the following is true? Group of answer choices - Effective depreciation per worker is 80, saving per worker is 100 and k will increase towards the steady state - Effective depreciation per worker is 100, saving per worker is 80 and k will decrease towards the steady state - Effective depreciation per worker is 100, saving per worker is 80 and k is at the steady state - Effective depreciation per worker is 80, saving per worker is 100 and k will decrease towards the steady stateConsider a Solow-Swan model with saving rate s - 0.4, labour force growth g, - 0.05. constant productivity A = 1, and depreciation = 0.05. If output per worker is y = Y/L = 200 and capital per worker is k = K/L = 800, which of the following is true? O Efective depreciation per worker is 60, saving per worker is 80 and k will decrease towards the steady state Effective depreciation per worker is 80, saving per worker is 80 and k is at the steady state O Efective depreciation per worker is 60, saving per worker is 80 and k will increase towards the steady state O Effective depreciation per worker is 80, saving per worker is 60 and k will decrease towards the steady state
- Suppose that the economy of Santa Cruz County follows the equations of the Solow model. It has an investment rate of 0.6 and a depreciation rate of 0.2, and an aggregate production function Y=4K(1/4) In the year 2019 the economy is in steady state. But in 2020 the CZU wildfire destroys 50% of the capital stock (so K2020= 0.5 K2019). Assuming the economy returns to its usual growth dynamics after that, what would the growth rate of GDP from 2020 to 2021? Write your answer in percentage points and round to 1 decimal place (e.g. 4.2 would mean 4.2% growth from 2020 to 2021).Question 1:- Suppose a country has a gross savings rate of 25%, a depreciation rate of 2%, and an incremental capital output ratio (lCOR) of 2.2. Using the Harrod-Domar growth model, a) find the implied rate of growth of total GDP in the country. b) How much would the rate of savings have to increase to raise the growth rate of total GDP to 10%? c) Is your answer consistent with the Harrod-Domar model? Explain.15.Consider a Solow-Swan model with saving rate s = 0.4, labour force growth gL = 0.05, constant productivity A = 1, and depreciation 86 = 0.05. If output per worker is y = Y/L = 200 and capital per worker is k = K/L = 800, which of the following is %3D %3D true? Group of answer choices 1.Effective depreciation per worker is 80, saving per worker is 60 and k will decrease towards the steady state 2.Effective depreciation per worker is 80, saving per worker is 80 and k is at the steady state 3.Effective depreciation per worker is 60, saving per worker is 80 and k will decrease towards the steady state 4.Effective depreciation per worker is 60, saving per worker is 80 and k will increase towards the steady state
- Consider a Solow–Swan model with saving rate s = 0.4, labour force growth gL = 0.05, constant productivity A = 1, and depreciation? = 0.05. If output per worker is y = Y/L = 200 and capital per worker is k = K/L = 800, how would k evolve over time?Group of answer choices k is below its steady state and decreases towards the steady state k is above its steady state and decreases towards the steady statek is at its steady state and remains constant k is above its steady state and increases towards the steady stateConsider the Solow model (Y-AK1/4L3/4). Suppose that the productivity parameter is A=500, the depreciation rate is d=1/10, the savings (investment) rate is s=0.30, and the labor force is constant and equal to 2 million. ÊÊWhat is the steady state capital stock (K)? Please choose the closest answer." a. b. 48200 million C. 34341 million d. 15930 million 18340 millionConsider a Solow model in discrete time with A(t) = L(t) = 1 and the following production function F(K) = {√R-K if K € (0, K) if K € [K, +∞o)* Other parts of the model including the capital depreciation rate & and saving rates are still constant parameters. (a) Prove that for V(6, s) € (0, 1)², there exists K> 0 s.t. the model has two steady-state equilibria. (b) When there are two steady-state equilibria, find the range of K(0) s.t. K(t) converges monotonically to at least one of the steady-states. (c) Given parameters {8, K}, find the range of parameter s, s.t. the economy always fails to grow.
- Suppose a Solow economy is initially at its steady state k∗, and suddenly is hit by a decrease in the depreciation rate δ, from δ to δ1. This change does not alter any of the other exogenous parameters in the model Depict this situation in a graph What happens to steady state level of capital per capita in this situation? What happens to the level of capital per capita over time? Depict this in a graph and explain intuitively.1) The depreciation rate of capital in the US is 8 = 0.043 and the population growth rate is g₁ = 0.007. Moreover, Y/K is around 0.35 on average over the last 60 years in the US (see the graph below). If the saving rate is s = 0.2 in the US, then find the long-run growth rate of average income in the US according to the Solow's model. (Note: To cross-check Compare your theoretical result with the actual growth rate of average income in the US which is 2%.) 0,43 0,41 0,39 0,37 0,35 0,33 0,31 0,29 0,27 0,25 1950 1953 1956 1959 1962 1965 Y/K in the US 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010In Wonderland production per worker (y) depends on capital per worker() such the y=10vk. Every year 15% of the capital stock depreciates, while workers in Wonderland save 10% of their income. Every year the population grows ratas te of 3% (c) The country of Neverland is identical to Wonderland in terms of output per worker, the savings rate, the depreciation rate and population growth. They differ in one respect: Wonderland has capital per worker of 10, whereas Neverland has capital per worker of 20. Which country experiences a higher growth rate of output per worker and how will their growth rates evolve over time?