Suppose that the economy's production function is given by Y=√K√N, where Y is output, K is capital, and N is the number of workers. The steady-state level of capital per worker in terms of the saving rate, s, and the depreciation rate, 8, is KIN= (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a superscript can be created with the character.) The steady-state level of output per worker in terms of the saving rate, s, and the depreciation rate, 8, is YIN = (Properly format your expression using the tools in the palette.) Suppose that the saving rate, s, is initially 15% per year (0.15), and the depreciation rate, 8, is 7.5 % (0.075). The steady-state capital stock per worker = (Enter your response as an integer.)

Microeconomic Theory
12th Edition
ISBN:9781337517942
Author:NICHOLSON
Publisher:NICHOLSON
Chapter9: Production Functions
Section: Chapter Questions
Problem 9.2P
Question
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K
possible
Suppose that the economy's production function is given by
Y=√K√N,
where Y is output, K is capital, and N is the number of workers.
The steady-state level of capital per worker in terms of the saving rate, s, and the depreciation rate, 8, is
KIN= (Properly format your expression using the tools in the palette. Hover over tools to see keyboard
shortcuts. E.g., a superscript can be created with the character.)
The steady-state level of output per worker in terms of the saving rate, s, and the depreciation rate, 8, is
YIN = (Properly format your expression using the tools in the palette.)
Suppose that the saving rate, s, is initially 15% per year (0.15), and the depreciation rate, 8, is 7.5 % (0.075).
The steady-state capital stock per worker = (Enter your response as an integer.)
The steady-state output per worker = (Enter your response as an integer.)
Suppose that there is a government deficit of 5% of GDP and that the government eliminates this deficit. Assume that
private saving is unchanged so that the natichal saving rate increases to 20%, or s = 0.2.
The new steady-state capital stock per worker =
(Round your response to two decimal places.)
The new steady-state output per worker = (Round your response to two decimal places.)
From the numbers above, we see that increases in the saving rate cause capital per worker and output per worker to
Transcribed Image Text:K possible Suppose that the economy's production function is given by Y=√K√N, where Y is output, K is capital, and N is the number of workers. The steady-state level of capital per worker in terms of the saving rate, s, and the depreciation rate, 8, is KIN= (Properly format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g., a superscript can be created with the character.) The steady-state level of output per worker in terms of the saving rate, s, and the depreciation rate, 8, is YIN = (Properly format your expression using the tools in the palette.) Suppose that the saving rate, s, is initially 15% per year (0.15), and the depreciation rate, 8, is 7.5 % (0.075). The steady-state capital stock per worker = (Enter your response as an integer.) The steady-state output per worker = (Enter your response as an integer.) Suppose that there is a government deficit of 5% of GDP and that the government eliminates this deficit. Assume that private saving is unchanged so that the natichal saving rate increases to 20%, or s = 0.2. The new steady-state capital stock per worker = (Round your response to two decimal places.) The new steady-state output per worker = (Round your response to two decimal places.) From the numbers above, we see that increases in the saving rate cause capital per worker and output per worker to
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