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Problem 2
Assume that total output is determined by the formula: Total Output = Number of Workers x Productivity
(a) If the workforce is growing by 1 percent a year but productivity doesn’t
improve, how fast can output increase?
(b) If productivity increases by 3 percent and the number of workers increases by 1 percent a year, how fast will output grow?
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- What is the potential impact of rapid economic growth on: a) A nation's tax base? b) GDP/Capita? Brief explanation for each. 2. If the annual rate of GDP growth is 3%, use the rule of 72 to calculate the number of years it would take for the GDP to double. Show all calculations. I (Ctrl)-Problem 2 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 population growth are 8 and n respectively, what would the growth rate of the economy be? (b) What would be the macroeconomic consequences of increasing the savings rate in this economy? Explain using the model and intuitively. (c) What would be the consequences of an increase in fertility in this economy? Are these consequences good or bad? Is this answer unambiguous? (d) How are human and physical capital different from one another in the way they evolve from period to period? (e) Does human capital have an upper limit? If it does, what is the resulting production function when this is reached and the growth rate of the economy? If it doesn't have a limit, what is the resulting growth rate of output as it…Q)1 a) Canada's real GDP was 2,016 billion dollars in 2017 and 2,053 billion dollars in 2018. Canada's population growth rate in 2018 was 0.8 percent. Calculate Canada's economic growth rate and growth rate of real GDP per person in 2018. b) Calculate the approximate number of years it will take for real GDP per person to double if an economy maintains an economic growth rate of 12 percent a year and a population growth rate of 7 percent a year.
- Labor productivity and economic growth outlined the logic of how increased productivity is associated with increased wages. Detail a situation where this is NOT the case and explain what it is not? Please read over this question carefully.7. Suppose that the economy's production function is Y = √K√LA where K is capital, L is labor, and A is the state of technology. Suppose that the saving rate (s) is equal to 6%, the rate of depreciation of capital (8) is equal to 5%, the number of workers grow at 5% per year and the rate of technological progress is 4%. (a) Find the steady state values of: iv. growth rate of output per worker growth rate of output v. (b) Suppose that the saving rate increases. What is its short-run and the long-run effect on the growth rate of per-capita output?14. Along the balanced growth path if productivity grows by 2%, and labor grows by 1%. If the elasticities of output with respect to capital and labor are 0.2 and 0.8, respectively, how much would output grow? A) 1.1% B) 2.0% C) 3.5% D) 4.2%
- Consider an economy where the elasticity of output with respect to capital is 0.4 and the elasticity of output with respect to the labor input is 0.6. Assume that the growth rate of output is 3%, the growth rate of capital is 1%, and the growth rate of the labor input is 2%. (a) What is the rate of productivity growth?Suppose a country's real GDP is $14 trillion and the population is 200 million. Instructions: Enter your answers as a whole number. a. What is this country's real GDP per capita? b. Suppose that during the next 10 years, real GDP increases by 50 percent and the population triples. At the end of this 10-year period, what will be its real GDP per capita? 2$Assume there are 100 workers and each worker produces 100 outputs. If the workforce is growing by 1% a year but productivity does not improve, how fast can output increase?
- 10. The Reverend Thomas Malthus (a British economist) thought that arithmetic growth in food supply (such as a farmer adding five more bushels of apples to his harvest every year) exhibited: A. positive exponential growth (logarithmic increase) over time B. logistic growth (linear increase, then exponential, then linear again) over time C. saturation growth (Michaelis-Menten increases) over time D. negative exponential growth (logarithmic decrease) over time E. linear growth (straight line increase) over timeSmall differences in growth rates in the size of the economy, over several decades, will result in big differences in the size of the economy. Pretend we start in 1950 and the U.S. growth in real GDP has been around 3.15%. This has resulted in real GDP growing 8 times over this 70-year period (1950 to 2020). If real GDP growth had been 4.0%, real GDP would be times larger. a. 8 (about the same growth as with 3.15% growth) b. 10 С. 14 d. 16For this question assume that technological progress does not occur. The rate of saving in Canada has generally been greater than the saving rate in the U.S. Given this information, we know that in the long run A) Canada's growth rate will be greater than the U.S. growth rate. B) capital per worker in Canada will be no different than U.S. capital per worker. C) investment per worker in Canada will be no different than U.S. investment per worker. D) all of these E) none of these
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