2. In the Solow growth model, suppose that theper-worker production function is given by yzk, with s = 0.25, d= 0.1, and n=0.02.(a) Suppose that in country A, z = 1. Calculateper capita income and capital per worker.(b) Suppose that in country B, z = 2. Calculateper capita income and capital per worker.(c) As measured by GDP per capita, how muchricher is country B than country A? Whatdoes this tell us about the potential fordifferences in total factor productivity toexplain differences in standards of livingSacross countries?

We have, y = zk.3, s = 0.25 d = 0.1 n = 0.02.

er production function is given by y = as = 0.25, d= 0.1, and n = 0.02. ose that in country A, z = 1. Calculate apita income and capital per worker. -ose that in country B, z = 2. Calculate apita income and capital per worker. easured by GDP per capita, how much r is country B than country A? What this tell us about the potential for rences in total factor productivity to %3D %3D

er production function is given by y = as = 0.25, d= 0.1, and n = 0.02. ose that in country A, z = 1. Calculate apita income and capital per worker. -ose that in country B, z = 2. Calculate apita income and capital per worker. easured by GDP per capita, how much r is country B than country A? What this tell us about the potential for rences in total factor productivity to %3D %3D

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Assume that a very tiny and very poor DVC has income per capita of $300 and total national income of $3 million. How large is its population? If its population grows by 2 percent in some year while its total income grows by 3 percent, what will be its new income per capita rounded to full dollars? If the population had not grown during the year, what would have been its income per capita?
Exercise 2: Growth and developmentCountries 1 and 2 have the production function: Yt = AiKαt L1−αt , where country 1 hasTotal Factor Productivity (TFP) of A1 = 25, country 2 has TFP A2 = 100, and α = 0.35for both. In the two countries population is constant and there is no technological progress.Every year capital depreciates by 6% in both countries. Country 1 saves 40% of output, andcountry 2 saves 20%.a) Write down the function of production per unit of labor. Suppose the two countriesstart with an initial capital stock (per unit of labor) of 500, what are the initial income andconsumption per unit of labor in both countries?b) Determine their steady state levels of capital, income and consumption per unit oflabor.c) Determine the difference in their steady state level of income per unit of labor, andhow much of that difference is due to differences in TFP and how much is due to differencesin capital per unit of labor.d) Suppose now that country 2 suddenly has access to the country 1…
5. Suppose that the Country of Eldesarrollo has a gross savings rate of 25%, a depreciation rate of 3%, an incremental capital-output ratio of 2.75, a population growth rate of 1.5% per year, and a per capita income of $1500. a. Using the Harrod-Domar (or AK) growth model, calculate the implied rate of growth of total GNI in Eldesarrollo. b. What is the implied rate of growth of GNI per capita? c. How much would the rate of gross savings have to increase to raise the growth rate of total GNI to 9%? d. Suppose that one-quarter of all investment is completely wasted in Eldesarrollo. Returning to the original numbers, what is the resulting effective ICOR, and what is the corresponding new implied growth rate of total GNI?
Examining the sub-national variation in development for many countries, such as Brazil, China, or Mexico, reveals O development is closely related to access to energy supplies. O there are no substantial variations in wealth at the regional scale. variations exist between regions that are isolated and those connected to international trade. O wealth is concentrated in the cooler, mountainous regions. cities are relatively underdeveloped compared to the agricultural lands. Clear sele
A country's standard of living is best measured by O the population growth rate. O real GDP. O real GDP per capita. the inflation rate, ASUS
Two countries, Alpha and Beta, have identical production possibilities frontiers. If Alpha produces at point A and Beta produces at point B, then O A. Alpha's economic growth rate will exceed Beta's OB. Alpha's and Beta's economic growth rates will be the same OC. Beta's future consumption will be less than than Alpha's O D. Alpha consumes more than Beta today, but it will grow slower than Beta ó Capital goods (per person) B Consumption goods (per person) PPF
For which of the following type of countries is the divergence between GNP per capita measured at official exchange rates and at purchasing power parity (PPP) likely to be largest? O the least developed countries the advanced economies open market economies industrialized countries
Consider a country with production function unction ? = 5? 1/2, where y is the output per worker and kis capital per worker. Suppose the investment in capital occurs at a rate of 35% of income perworker every period, the depreciation rate is 1.5% and the population growth rate is 2%. Use excel toplot the production function, investment line and capital depletion line with k on the x-axis (usethe attached spreadsheet to draw your graphs).a. What is the steady state level of y and k.b. Suppose TFP increases by 20%. What happens to the steady state y and k?c. Suppose the investment rate increases to 40%. What happens to the steady state y and k?
43
4
Question 22 Here are hypothetical data for Germany and Japan on average labor productivity, the number of persons employed, and population in a given year: Average labor |productivity S88,204 $44,216 Number of persons employed 32.36 million 50.48 million than that of Germany by approximately . Population 78.17 million 104.3 million Germany Japan Japan's real GDP per person is O lower; $15,114 O higher; $121,711 O lower; $121,711 O higher; $15,114
Select one or more: O a. If Country C's GDP per capita rises from $2,500 to 7,500, and Country D's GDP per capita rises from $6,000 to 18,000, the ratio of GDP per capita between the two countries is unchanged. O b. If a country's GDP doubles every 50 years on a ratio scale graph against time it will rise at an increasing rate. O c. Country B is growing a higher percentage rate than Country A, but Country A is 5 times richer than Country B. On a linear scale graph against time the gap between the two lines must be narrowing. O d. Country E is growing at the same percentage rate as Country F, but Country E is 3 times richer than Country F. On a log scale graph against time the gap between the two lines will be constant.