Country X and Country Y have the same level of output per worker. They also have the same values for the rate of depreciation, 8, and the measure of productivity, A. In Country X output per worker is growing, whereas in Country Y it is falling. What can you say about the two coun- tries' rates of investment? CHAPTER 3 Physical Capital b. In year 1, the level of capital per worker is 16. In a table such as the following one, show how capital and output change over time (the Year 1 2 Capital k 16 16.2 Output y = k¹/2 4 c. Calculate the growth rate of output between years 1 and 2. d. Calculate the growth rate of output between years 7 and 8. e. Comparing your answers from parts c and d, what can you conclude about the speed of output growth as a country approaches its steady state? 7. In a country the production func y = k¹/2. The fraction of output 0.25. The depreciation rate, 8, is a. What are the steady-state leve worker, k, and output per wor beginning is filled in as a dem Continue this table up to year Investment YY 1 Depreciation Sk 0.8 Chang- Capital YY- 0.2 In a country, output is produced physical capital. The production per-worker terms is y = k¹/2. Th rate is 2%. The investment rate ( mined as follows: y = 0.20 if y≤ 1 y = 0.40 if y> 1
Country X and Country Y have the same level of output per worker. They also have the same values for the rate of depreciation, 8, and the measure of productivity, A. In Country X output per worker is growing, whereas in Country Y it is falling. What can you say about the two coun- tries' rates of investment? CHAPTER 3 Physical Capital b. In year 1, the level of capital per worker is 16. In a table such as the following one, show how capital and output change over time (the Year 1 2 Capital k 16 16.2 Output y = k¹/2 4 c. Calculate the growth rate of output between years 1 and 2. d. Calculate the growth rate of output between years 7 and 8. e. Comparing your answers from parts c and d, what can you conclude about the speed of output growth as a country approaches its steady state? 7. In a country the production func y = k¹/2. The fraction of output 0.25. The depreciation rate, 8, is a. What are the steady-state leve worker, k, and output per wor beginning is filled in as a dem Continue this table up to year Investment YY 1 Depreciation Sk 0.8 Chang- Capital YY- 0.2 In a country, output is produced physical capital. The production per-worker terms is y = k¹/2. Th rate is 2%. The investment rate ( mined as follows: y = 0.20 if y≤ 1 y = 0.40 if y> 1
Chapter1: Making Economics Decisions
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Transcribed Image Text:6. Country X and Country Y have the same level
of output per worker. They also have the same
values for the rate of depreciation, 8, and the
measure of productivity, A. In Country X output
per worker is growing, whereas in Country Y it
is falling. What can you say about the two coun-
tries' rates of investment?
8.
CHAPTER 3 Physical Capital
b. In year 1, the level of capital per worker is
16. In a table such as the following one, show
how capital and output change over time (the
Year
1
2
Capital
k
16
16.2
Output
y = k¹/2
4
c. Calculate the growth rate of output between
years 1 and 2.
d. Calculate the growth rate of output between
years 7 and 8.
e. Comparing your answers from parts c and
d, what can you conclude about the speed of
output growth as a country approaches its
steady state?
nsider an economy in which the amount of
7. In a country the production function is
y = k¹/2. The fraction of output invested, y, is
0.25. The depreciation rate, 8, is 0.05.
a. What are the steady-state levels of capital per
worker, k, and output per worker, y?
beginning is filled in as a demonstration).
Continue this table up to year 8.
Investment
YY
1
Depreciation
Sk
0.8
Change in
Capital Stock
Yy-Sk
0.2
. In a country, output is produced with labor and
physical capital. The production function in
per-worker terms is y = k¹/². The depreciation
rate is 2%. The investment rate (y) is deter-
mined as follows:
y = 0.20 if y ≤ 10
y = 0.40 if y> 10
Draw a diagram showing the steady state(s) of
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