Figure 2.12 b d y (Figure 2.12) Suppose the y axis of this graph represents consumer goods and the x axis represents capital goods. If the economy is currently operating at point b and it wants to accelerate its future growth ceteris paribus, the opportunity cost would be: reduced capital investment increased capital investment. reduced consumer goods no change in consumption. increased consumption

Figure 2.12 b d y (Figure 2.12) Suppose the y axis of this graph represents consumer goods and the x axis represents capital goods. If the economy is currently operating at point b and it wants to accelerate its future growth ceteris paribus, the opportunity cost would be: reduced capital investment increased capital investment. reduced consumer goods no change in consumption. increased consumption

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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41. Assume that a country's per-worker production is y=1.5k3/4, where y is output per worker and k is capital per worker. Assume also that 10 percent of capital depreciates per year and there is no population growth or technological change. a. If the saving rate (s) is 0.15, what are capital per worker, production per worker, and consumption per worker in the steady state? b. Solve for steady-state capital per worker, production per worker, and consumption per worker with s-0.3. c. Solve for steady-state capital per worker, production per worker, and consumption per worker with s-0.45. d. Is it possible to save too much? Why?
7. Suppose that the economy's production function is Y = √K√LA where K is capital, L is labor, and A is the state of technology. Suppose that the saving rate (s) is equal to 6%, the rate of depreciation of capital (8) is equal to 5%, the number of workers grow at 5% per year and the rate of technological progress is 4%. (a) Find the steady state values of: iv. growth rate of output per worker growth rate of output v. (b) Suppose that the saving rate increases. What is its short-run and the long-run effect on the growth rate of per-capita output?
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