Use the Solow model below to answer the question. Y3 Y₂ Y ₁ K₂ K3 Y = Af (K, H) dk SY K Suppose that Y₁ is 1,458, Y₂ is 5,898, and Y3 is 11,618. The savings rate for this economy is 18% and the depreciation rate is 5.4%. If this economy is currently at a GDP of 1,458, what is the smallest amount of foreign aid which would move the economy up to a GDP of 11,618?

Use the Solow model below to answer the question. Y3 Y₂ Y ₁ K₂ K3 Y = Af (K, H) dk SY K Suppose that Y₁ is 1,458, Y₂ is 5,898, and Y3 is 11,618. The savings rate for this economy is 18% and the depreciation rate is 5.4%. If this economy is currently at a GDP of 1,458, what is the smallest amount of foreign aid which would move the economy up to a GDP of 11,618?

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

Consider a Solow-Swan economy with a Cobb-Douglas production function. Imagine that the savings rate "s" is an increasing function of capital and it has the following functional form: for low values of k the savings rate is constant at some low level. For intermediate levels of k, the savings rate increases rapidly. For high values of k the savings rate is constant again. In other words, the savings rate looks like: Does a steady state necessarily exist? b. Will the steady state be necessarily unique? а. Will the steady state(s) be stable? d. Will there be a "poverty trap"? (define poverty trap) С. How can this model be used (and how has this model been used) to justify large increases in foreign development aid? Discuss THREE potential flaws of the "savings poverty trap" model. е. f.
Give typing answer with explanation and conclusion
In year 1, a country has saving rates, s=0.1, productivity a=2 and depreciation rate d=0.1 . In year 2, the same country has s=0.1, a=1, d=0.2 Using the endogenous growth model, find the economy’s growth rate in year 1 and What is the state of the economy in year 1? (Use business cycle words) Using the endogenous growth model, find the economy’s growth rate in year 2.What is the state of the economy in year 2? (Use business cycle words) If in year 1, delta c/c=0.2, delta u /u =-0.1 and in year 2, deltac/c=-0.1, delta u/u =0.15 , describe the variables and using business cycle words Please answer the business cycle explanation part!
Exercise 4: Growth and capital over-accumulation = Suppose two countries, A and B, with the same production function Y KaL¹-a. The value of a is 0.30, the growth rate of population is 2% and the depreciation rate is 5%. a) Show that with price-taking firms the share of labor must be 1 a. b) Compute the stock of capital, output and consumption per unit of labor in the steady state if the savings rates were 25% for country A and 35% for country B. c) Compare both economies to the Golden Rule. d) Explain what would happen to both countries if suddenly their savings rate became the Golden Rule savings rate.
Do not type in dollar signs or round any of your answers. Suppose a country's production function is Y = K1/2L1/2. If capital depreciates at the rate of 5 percent each year and the population grows at the rate of 1 percent each year, calculate the savings rate that would lead to a steady-state equilibrium value for capital per worker of 100 machines: savings rate = percent In this steady-state equilibrium, output per worker is and consumption per worker is
Assume the economy is initially in its balanced growth state. Suppose policymakers pursue policies that would increase the saving rate to s1=0.3. Draw a carefully-labelled diagram to illustrate the effect of the change in the saving rate on the economy in the long run. Explain the effect of the change in saving rate on steady-state capital per effective worker and steady-state consumption per effective worker?
Country A produces GDP according to the following equation: GDP = 5√K and has a capital stock of 9,411. If the country devotes 13% of its GDP to producing or repairing investment goods, how much is this country currently investing? Rounds your answer to two decimal places.
Why do large differences in capital per worker lead to relatively small differences in predicted GDP across countries? Workers exert more effort when they have less capital Capital has a high depreciation rate 4 O The exponent on capital in the production function is much lower than one O Capital is not an input in production
Suppose Westeros produces output according to the production function: Y = √K The fraction of output that is saved and invested in new capital is 20%. The depreciation rate is 5%. Use this information to answer the following questions. Macmillan Learning a. What is the steady-state amount of capital (K) in Westeros? b. What is the steady-state amount of output (Y*) in Westeros? c. If Westeros had started out with 25 units of capital, what would the Solow model predict would happen to its output in the long run? O It will decrease, since that is above its steady state level of output of 4 It will decrease, since that is above its steady state level of output of 16 It will increase, since that is below its steady state level of output of 16 It will increase, since that is above its steady state level of output of 41 It will remain at 25, since that is its steady state level of output
Good Evening My name is Helen here's the problem A country is described by the solow model, with production function of y=k1/2, Suppose that k is equal to 400. The fraction of output invested is 50%. the depreciation is 5%. Is the country at its steady-state level of output per worker, above the steady state, or below the steady state? Show how you reached your conclusion.
Consider an Economy in steady state, with a Cobb Douglas Production function. They have a savings rate of 45% and a capital share of 2/7. Technological progress is 1%, population growth is 3%, and Depreciation is 5%. 1. Derive the Production function per effective worker and solve for steady state capital, output, and consumption per effective worker. 2. What is MPK in the steady state? Is this country saving too much or too little? How do you know? 3. What should you lower or raise the saving rate to, in order to reach the golden rule steady state
An economy consumes 1 million chickens each year. A new technology in raising chickens lowers the price of each chicken from $50 to $40. Suppose the economy still consumes 1 million chickens each year at the lower price. Do you agree that since the consumers pay $10 million less, the national saving due to the change in price equals $10 million?