Original K = $45 billion Original L = 12.5 million d = 6% L growth = 2.5% K= value of kapital; L= Labor force; d = Depreciation 1. What is the original K/L ratio? 45bil/12.5mil= 18:5 or 3.6 is the K/L ratio 2. After 1 year, given depreciation and the growth in the labor force, what is the new K/L ratio? 3.30 work=(45 bil-6/100×45 bil, 12.5 Million+2.5/100×12.5 million, K/L Ratio=42.3 bil/12.81 mil=3.30K/L Ratio=42.3 million12.81 million=3.30) 3. How much gross investment is necessary to bring the K/L ratio back to its original level?
Original K = $45 billion Original L = 12.5 million d = 6% L growth = 2.5% K= value of kapital; L= Labor force; d = Depreciation 1. What is the original K/L ratio? 45bil/12.5mil= 18:5 or 3.6 is the K/L ratio 2. After 1 year, given depreciation and the growth in the labor force, what is the new K/L ratio? 3.30 work=(45 bil-6/100×45 bil, 12.5 Million+2.5/100×12.5 million, K/L Ratio=42.3 bil/12.81 mil=3.30K/L Ratio=42.3 million12.81 million=3.30) 3. How much gross investment is necessary to bring the K/L ratio back to its original level?
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Original K = $45 billion
Original L = 12.5 million
d = 6%
%3D
L growth = 2.5%
K= value of kapital; L= Labor force; d= Depreciation
1. What is the original K/L ratio?
45bil/12.5mil= 18:5 or 3.6 is the K/L ratio
2. After 1 year, given depreciation and the growth in the labor force, what is the new K/L ratio?
3.30 work-(45 bil-6/100x45 bil, 12.5 Million+2.5/100×12.5 million, K/L Ratio=42.3 bil/12.81
mil=3.30K/L Ratio=42.3 million12.81 million=3.30)
3. How much gross investment is necessary to bring the K/L ratio back to its original level?
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