Use the following table to find the steady-state values of the capital-labor ratio and output if the per-worker production 0.3 function is y₁ = 2k₁ S Saving rate 8 Depreciation rate n A Population growth rate Technology 0.35 0.02 0.06 2 k* = Steady-state capital-labor ratio= y* = Steady-state output = (Round your responses to two decimal places.) ILD Output, Investment, and Depreciation Capital-Labor Ratio Output Depreciation Investment After plotting the final point of your multipoint curve, press the Esc key on your keyboard to end the line. Q

Use the following table to find the steady-state values of the capital-labor ratio and output if the per-worker production 0.3 function is y₁ = 2k₁ S Saving rate 8 Depreciation rate n A Population growth rate Technology 0.35 0.02 0.06 2 k* = Steady-state capital-labor ratio= y* = Steady-state output = (Round your responses to two decimal places.) ILD Output, Investment, and Depreciation Capital-Labor Ratio Output Depreciation Investment After plotting the final point of your multipoint curve, press the Esc key on your keyboard to end the line. Q

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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5. Suppose that the Country of Eldesarrollo has a gross savings rate of 25%, a depreciation rate of 3%, an incremental capital-output ratio of 2.75, a population growth rate of 1.5% per year, and a per capita income of $1500. a. Using the Harrod-Domar (or AK) growth model, calculate the implied rate of growth of total GNI in Eldesarrollo. b. What is the implied rate of growth of GNI per capita? c. How much would the rate of gross savings have to increase to raise the growth rate of total GNI to 9%? d. Suppose that one-quarter of all investment is completely wasted in Eldesarrollo. Returning to the original numbers, what is the resulting effective ICOR, and what is the corresponding new implied growth rate of total GNI?
1) Assume an economy without population growth or technological progress. Their production function is given by y = 35k0.5. Their currency capital stock is 100, and the depreciation rate is 17.5%. Give a savings rate such that: Income per worker will grow over the current period а. b. Income per worker stay the same over the current period c. Income per worker will fall over the current period
10. In the steady state in a Solow model including effective/productive workers, the growth of output per effective worker is: G 0 N+G Depreciation rate Savings rate
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Given a saving rate of 5%, a depreciation rate of 1%, and a production function in which y = k0.5where y is output per worker and k is capital per worker, calculate the steady state values fori. capital per worker, ii. output per worker, iii. consumption per worker
Consider a country with production function unction ? = 5? 1/2, where y is the output per worker and kis capital per worker. Suppose the investment in capital occurs at a rate of 35% of income perworker every period, the depreciation rate is 1.5% and the population growth rate is 2%. Use excel toplot the production function, investment line and capital depletion line with k on the x-axis (usethe attached spreadsheet to draw your graphs).a. What is the steady state level of y and k.b. Suppose TFP increases by 20%. What happens to the steady state y and k?c. Suppose the investment rate increases to 40%. What happens to the steady state y and k?
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W (2 bookr Suppose that the depreciation rate increases. In the Solow growth model, determine the effects of this on the quantity of capital per worker and on output per worker in the steady state. Explain the economic intuition behind your results.
QUESTION 2 If Z = (XY)2, and we know that the annual growth rate of Z is 3%, and the annual growth rate of X is 2%, the annual growth rate of Y is а. - 1% b. - 0.5% C. 0.5% d. 1.0%
The convergence to a steady-state capital-labour ratio k* is ensured by the fact that if k is at a level Multiple Choice lower than k*, saving will exceed the investment required to maintain constant k, causing k to rise lower than k*, investment will exceed saving, leading to an increase in the capital stock lower than k*, saving will exceed the investment required to maintain a constant k, causing output per capita to decline higher than k*, the rate of depreciation will be higher than the savings rate, causing k to decrease higher than K*, output per capita will continue to increase until a new steady-state equilibrium is reached