Economic Growth II – Work It Out Question 1a. At what rates do total output and output per workergrow?An economy has a Cobb–Douglas production function:Y = K"(LE)'-aTotal output growth rate:%The economy has a capital share of 0.20, a saving rate of 41percent, a depreciation rate of 3.50 percent, a rate ofpopulation growth of 6.25 percent, and a rate of labor-augmenting technological change of 2.0 percent. It is inOutput per worker growth rate:%steady state.Output per effective workerdeclines in the steady state.increases in the steady state.is constant in the steady state and does not change. Economic Growth II – Work It Out Question 1b. Solve for capital per effective worker (k*), output pereffective worker (y*), and the marginal product of capital.An economy has a Cobb-Douglas production function:Y = K"(LE)!-«1-ak*The economy has a capital share of 0.20, a saving rate of 41percent, a depreciation rate of 3.50 percent, a rate ofpopulation growth of 6.25 percent, and a rate of labor-augmenting technological change of 2.0 percent. It is iny*steady state.marginal product of capital

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Economic Growth II – Work It Out Question 1 An economy has a Cobb–Douglas production function: Y = Kª(LE)'-a The economy has a capital share of 0.20, a saving rate of 41 percent, a depreciation rate of 3.50 percent, a rate of population growth of 6.25 percent, and a rate of labor- augmenting technological change of 2.0 percent. It is in steady state.

Economic Growth II – Work It Out Question 1 An economy has a Cobb–Douglas production function: Y = Kª(LE)'-a The economy has a capital share of 0.20, a saving rate of 41 percent, a depreciation rate of 3.50 percent, a rate of population growth of 6.25 percent, and a rate of labor- augmenting technological change of 2.0 percent. It is in steady state.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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