Production function is given by Y - 45K°(AN)'-a, where a-1/3. The rate of depreciation of capital is equal to 10 percent, and the rate of population growth is equal to 2 percent. The saving rate at time t was equal to 12 percent and the level of technology A, was equal to 5. The economy was in the steady state at time t and the rate of growth of aggregate capital stock was equal to 5 percent Use the Solow growth model to answer the following questions (Please fillin numbers, percentoge values should be provided as numbers greater than 1. For example if inflation is 10 percent, you should wite "10" in the blank space provided) 1. The rate of technological progress at time t was equal to 2. The level of per capita consumption at time t was equal to percent 3. Assume that at time t+1 the saving rate increased to the optimal (golden rule) saving rate. The difference between the new steady state level of consumption per unit of effective labor and the level of consumption per unit of effective labor in period t+1, was equal to 4. Assume that the economy was not in the steady state and the rate of growth of capital per unit of effective labor was equal to 3 percent. The rate of growth of output per unit of effective labor was equal to percent.
Production function is given by Y - 45K°(AN)'-a, where a-1/3. The rate of depreciation of capital is equal to 10 percent, and the rate of population growth is equal to 2 percent. The saving rate at time t was equal to 12 percent and the level of technology A, was equal to 5. The economy was in the steady state at time t and the rate of growth of aggregate capital stock was equal to 5 percent Use the Solow growth model to answer the following questions (Please fillin numbers, percentoge values should be provided as numbers greater than 1. For example if inflation is 10 percent, you should wite "10" in the blank space provided) 1. The rate of technological progress at time t was equal to 2. The level of per capita consumption at time t was equal to percent 3. Assume that at time t+1 the saving rate increased to the optimal (golden rule) saving rate. The difference between the new steady state level of consumption per unit of effective labor and the level of consumption per unit of effective labor in period t+1, was equal to 4. Assume that the economy was not in the steady state and the rate of growth of capital per unit of effective labor was equal to 3 percent. The rate of growth of output per unit of effective labor was equal to percent.
Chapter1: Making Economics Decisions
Section: Chapter Questions
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Transcribed Image Text:Production function is given by Y = 45K (AN)-a, where a=1/3. The rate of depreciation of capital is equal to 10 percent, and the rate of
population growth is equal to 2 percent. The saving rate at time t was equal to 12 percent and the level of technology A, was equal to 5. The
economy was in the steady state at time t and the rate of growth of aggregate capital stock was equal to 5 percent. Use the Solow growth model to
answer the following questions.
(Please fill in numbers, percentage values should be provided as numbers greater than 1. For example if inflation is 10 percent, you should write "10" in
the blank space provided)
1. The rate of technological progress at time t was equal to
2. The level of per capita consumption at time t was equal to
3. Assume that at time t+1 the saving rate increased to the optimal (golden rule) saving rate. The difference between the new steady state level of
percent
consumption per unit of effective labor and the level of consumption per unit of effective labor in period t+1, was equal to
4. Assume that the economy was not in the steady state and the rate of growth of capital per unit of effective labor was equal to 3 percent. The
rate of growth of output per unit of effective labor was equal to
percent.
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