The production function for an economy can be expressed as Y= F(K,L), where Y is realGDP, K is the quantity of capital in the economy, and L is the quantity of labor in theeconomy.If Y = K0.5 L0.5, what is real GDP if the quantity of capital is 900 and the quantity of labor isа.400?b. What is/are the endogenous variable(s) in this model?What is/are the exogenous variable(s) in this model?с.

The production function for an economy can be expressed as Y= F(K,L), where Y is real GDP, K is the quantity of capital in the economy, and L is the quantity of labor in the economy. a. If Y = K0.5 L0.5, what is real GDP if the quantity of capital is 900 and the quantity of labor is %3D 400? b. What is/are the endogenous variable(s) in this model? What is/are the exogenous variable(s) in this model? с.

The production function for an economy can be expressed as Y= F(K,L), where Y is real GDP, K is the quantity of capital in the economy, and L is the quantity of labor in the economy. a. If Y = K0.5 L0.5, what is real GDP if the quantity of capital is 900 and the quantity of labor is %3D 400? b. What is/are the endogenous variable(s) in this model? What is/are the exogenous variable(s) in this model? с.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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6. Consider a hypothetical economy that has the production function Y = = F (K, LE) = K¹/3 (LE) 2/3, where Y is output, K is capital, and LE is the number of effective workers. Suppose the saving rate is 20%, the capital depreciates by 3%, the population grows at the rate of 1%, and the rate of labor-augmenting technological change is 1%. a. Solve for the per-effective-worker production function.
In class we argued that if people could accumulate human as well as physical capital, the production function would look like the “AK” production function. • (a) If the production function is AK and the savings rate is constant at rate “s”, and the rates of depreciation and populati on growth are δ and n respectively, what would the growth rate of the economy be? • (b) What would be the macroeconomic consequences of decreasing the savings rate in this economy? • (c) What would be the consequences of an increase in fertility in this economy? • (d) Would the consequences of decreasing fertility be UNAMBIGUOUSLY GOOD? • (e) Can human capital grow without bounds? Explain why or why not (make sure you discuss the physical nature of human capital). • (f) What is the growth rate of the economy (in the absence of technological progress) if human capital cannot grow without bounds?
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