In 2022 a country has the following data: (a) 498.32 GDP Y 400 (b) 504.42 TFP A 5 The production function is Y = AKO.4L0.6 and the capital stock evolves according to Kt+1 = (1 - d)Kt + It. The saving rate 22%, the depreciation rate is 10%, the growth rate of labor is 0.6% and TFP growth is 2%. Assume that population is equal to labor. Use the Solow model to calculate per-capita GDP in 2024 (two years later). (c) 516.96 (Right answer) (d) 548.87 Capital K 1,100 Labor L 20

In 2022 a country has the following data: (a) 498.32 GDP Y 400 (b) 504.42 TFP A 5 The production function is Y = AKO.4L0.6 and the capital stock evolves according to Kt+1 = (1 - d)Kt + It. The saving rate 22%, the depreciation rate is 10%, the growth rate of labor is 0.6% and TFP growth is 2%. Assume that population is equal to labor. Use the Solow model to calculate per-capita GDP in 2024 (two years later). (c) 516.96 (Right answer) (d) 548.87 Capital K 1,100 Labor L 20

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

11. In 2022 a country has the following data:
GDP
TFP
Capital
Labor
Y
A
K
L
400
1,100
20
The production function is Y = A¿KQ4 LQ.6 and the capital stock evolves according
to Kt+1
growth rate of labor is 0.6% and TFP growth is 2%. Assume that population is equal
to labor. Use the Solow model to calculate per-capita GDP in 2024 (two years later).
(1 – d)Kt + It. The saving rate 22%, the depreciation rate is 10%, the
(а) 498.32
(b) 504.42
(c) 516.96 (Right answer)
(d) 548.87

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