information regarding Country AAA:Output per capita: y = 3k0.5Depreciation rate: d = 0.10Growth rate of population: n = 0.05Savings function: S = 0.3YCalculate the capita labor ration (k) and output per capita at the steady-state equilibrium.Say the savings rate in Country AAA has increased to 0.5. Everything else remains the same. Repeat question a) above.Say the population rate has increased to 0.08. Everything else remains the same. Repeat question a) above.hat conclusion can you infer from the answers to question b) and c) above?

Answered: information regarding Country AAA:…

information regarding Country AAA: Output per capita: y = 3k0.5 Depreciation rate: d = 0.10 Growth rate of population: n = 0.05 Savings function: S = 0.3Y

MACROECONOMICS FOR TODAY

10th Edition

ISBN:9781337613057

Author:Tucker

Publisher:Tucker

Chapter20: Growth And Less Developed Countries

Section: Chapter Questions

Problem 3SQP

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Country A and country B both have the production function Y= F(K,L)= K 1/2 L 1/2 Assume that neither country experiences population growth nor technological progress and that 5% of capital depreciates each year. Assume further that country A saves 10% of output each year and country B saves 20% of output each year. Using your answer from part (a) and the steady-state condition that investment equals depreciation, find the steady-state level of capital per worker for each country. Then find the steady-state levels of income per worker and consumption per worker. (b) Suppose that both countries start off with a capital per stock per worker of 2. What are the levels of income per worker and consumption per worker? Remembering that the change in the capital stock is investment less depreciation, use a calculator to show how the capital stock per worker will evolve over time in both countries. For each year, calculate income per worker and…
You are given the following information regarding Country AAA: Output per capita: y = 3k0.5 Depreciation rate: d = 0.10 Growth rate of population: n = 0.05 Savings function: S = 0.3Y Based on the above information: Calculate the capita labor ration (k) and output per capita at the steady state equilibrium.
Exercise 2: Growth and development Countries 1 and 2 have the production function: Y = AKL-a, where country 1 has Total Factor Productivity (TFP) of A₁ = 25, country 2 has TFP A₂ = 100, and a = 0.35 A2 for 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, and country 2 saves 20%. a) Write down the function of production per unit of labor. Suppose the two countries start with an initial capital stock (per unit of labor) of 500, what are the initial income and consumption per unit of labor in both countries? b) Determine their steady state levels of capital, income and consumption per unit of labor. c) Determine the difference in their steady state level of income per unit of labor, and how much of that difference is due to differences in TFP and how much is due to differences in capital per unit of labor. d) Suppose now that country 2 suddenly has access to the…
Consider a country with production function , where y = 5k1/2, where y is the output per worker and k is capital per worker. Suppose the investment in capital occurs at a rate of 35% of income per worker every period, depreciation rate is 1.5% and population growth rate is 2%. Use excel to plot the production function, investment line and capital depletion line with k on the x-axis (use the attached spread sheet to draw your graphs). -attached spreadsheet shown below***** 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
please answer the following, I have attached an image of the question for better format. Thanks! 3. Suppose that the production function of a country is given by Y=KaL1-a, where 0<a<1, Y is output, L is labour, and K is capital, Derive the equation for steady state capital per worker, output per worker, and consumption per worker in terms of the saving rate (s) and depreciation rate (d).
Assume an endogenous growth model with labour augmenting technology. The production function is Y=RK,AN), with A = 2(KIN) such that y = 2k. If the savings rate is s= 0.08, the rate of population growth is n = 0.03, and the rate of depreciation is d= 0.04, what is the growth rate of output per capita? Multiple Choice 1% 3% 4% 7% 9%
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Consider an economy that has access to a production technology Y = AKαL1−α where Y is output, A is the level of technology, K is capital and L is the amount of labor in the economy. Capital evolves according to K˙ = sY (thus, the depreciation rate δ = 0). The x˙ population growth rate is n. (Throughout, gx = x , where x can be any of the variables in the model.) (a) Assume that technology is determined by A = BKφ What sort of endogenous growth model is this? Find K/K in terms of the K, L, and other parameters of the model.
Use the Solow model below to answer the question. Y Y3 Y₂ Y₁ K₁₁ K₂ K3 Y = Af(K,H) dk SY K Suppose that Y₁ is 1,475, Y₂ is 6,184, and Y3 is 10,992. The savings rate for this economy is 30% and the depreciation rate is 8.2%. If this economy is currently at a GDP of 1,475, what is the smallest amount of foreign aid which would move the economy up to a GDP of 10,992? Assume that all foreign aid becomes investment. Round your final answer to two decimal places.
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Use the following information to answer the questions below: (1) the rate of depreciation is 10% per year, (2) the population growth rate is 2% per year, and (3) the growth rate of technology is 3% per year Refer to the information above. Which of the following equals the annual growth rate of "effective labour" in the steady state in this economy? A. 5% B. 3% C. 15% D. 2% E. 10%
Suppose the economy of an island behaves as the Solow model (Y=AK1/2L1/2), version 1.0 (constant population). Suppose that the productivity parameter is A=90, the depreciation rate is d=1/10, the savings (investment) rate is s=0.10, and the labor force is equal to 2 million (and constant over time). 1-Due to climate change, from 2011 onward, every year the island is hit by hurricanes of increasing force that destroy capital. As a result, the depreciation rate doubles. What will be the new long-run (steady state) value for income per worker (Y/L)? Pick the closest value. Also label the new steady-state GDP as point C in the diagram. Between 75 and 85 None of the other options Between 4,500 and 5,200 Between 8,000 and 8,500 Between 44 and 49 2-In year 2021 investors recognize that the depreciation rate is higher than a decade earlier. They also recognize that the actual returns to their investments in physical capital over the previous decade have consistently fallen below their…