Exercise 4.1 (The U.S. Population Slowdown and Income Per Capita). U.S. Population in Selected Years Year Population in millions 1870 1871 2015 2016 40.24 41.10 3. Provide intuition. 321.08 323.30 1. Using the information provided in the table, calculate the population growth rate between 1870 and 1871 and between 2015 and 2016. Denote these two numbers n and n', respectively. 2. Suppose that the depreciation rate is 10 percent per year (8 = 0.1), that the saving rate is 25 percent (o= 0.25), and that the production function is of the Cobb-Douglas form, that is, Y₁ = AKL-a, where Yt, Kt, and Lt denote, respectively, output, the stock of capital, and population in period t, and a and A are constant parameters. Assume that a = 0.3. Let y* and y*' denote the steady-state output per capita associated with n and n', respectively. Calculate the percentage in- crease in long-run output per capita caused by a permanent fall in the population growth rate from n to n', that is, calculate (y*/y*'-1)× 100.

Exercise 4.1 (The U.S. Population Slowdown and Income Per Capita). U.S. Population in Selected Years Year Population in millions 1870 1871 2015 2016 40.24 41.10 3. Provide intuition. 321.08 323.30 1. Using the information provided in the table, calculate the population growth rate between 1870 and 1871 and between 2015 and 2016. Denote these two numbers n and n', respectively. 2. Suppose that the depreciation rate is 10 percent per year (8 = 0.1), that the saving rate is 25 percent (o= 0.25), and that the production function is of the Cobb-Douglas form, that is, Y₁ = AKL-a, where Yt, Kt, and Lt denote, respectively, output, the stock of capital, and population in period t, and a and A are constant parameters. Assume that a = 0.3. Let y* and y' denote the steady-state output per capita associated with n and n', respectively. Calculate the percentage in- crease in long-run output per capita caused by a permanent fall in the population growth rate from n to n', that is, calculate (y/y*'-1)× 100.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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