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Wonka Land has an aggregate production function given by the equation: Y=K^(1/5) (L)^(4/5). Examining the economy, we find the current savings rate is 45%, capital depreciates at a rate of 5%, and the current population growth rate is 10%. a) (2 points) What is the per-worker production function? b) (6 points) Find the steady-state levels of capital per-worker, output per-worker, and consumption per-worker. (round answers to two decimals, if necessary) c) (6 points) Calculate the Golden Rule level of capital per-worker. What optimal savings rate is necessary to achieve the Golden Rule equilibrium? Lastly, find the maximized consumption per-work. (round answers to two decimals, if necessary) d) (4 points) To achieve the optimum Golden Rule consumption level, policy makers (recalling training in their undergraduate economics course) argue that they can instead modify the population growth rate. Explain how this can be achieved using a diagram to justify your thoughts. Afterwards, find the necessary population growth rate to achieve the Golden Rule consumption level. Upload Choose a File

Wonka Land has an aggregate production function given by the equation: Y=K^(1/5) (L)^(4/5). Examining the economy, we find the current savings rate is 45%, capital depreciates at a rate of 5%, and the current population growth rate is 10%. a) (2 points) What is the per-worker production function? b) (6 points) Find the steady-state levels of capital per-worker, output per-worker, and consumption per-worker. (round answers to two decimals, if necessary) c) (6 points) Calculate the Golden Rule level of capital per-worker. What optimal savings rate is necessary to achieve the Golden Rule equilibrium? Lastly, find the maximized consumption per-work. (round answers to two decimals, if necessary) d) (4 points) To achieve the optimum Golden Rule consumption level, policy makers (recalling training in their undergraduate economics course) argue that they can instead modify the population growth rate. Explain how this can be achieved using a diagram to justify your thoughts. Afterwards, find the necessary population growth rate to achieve the Golden Rule consumption level. Upload Choose a File

ENGR.ECONOMIC ANALYSIS
ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN:9780190931919
Author:NEWNAN
Publisher:NEWNAN
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Wonka Land has an aggregate production function given by the equation: Y=K^(1/5) (L)^(4/5). Examining the economy, we find the current savings rate is 45%, capital depreciates at a rate of 5%, and the current population growth rate is 10%. a) (2 points) What is the per-worker production function? b) (6 points) Find the steady-state levels of capital per-worker, output per-worker, and consumption per-worker. (round answers to two decimals, if necessary) c) (6 points) Calculate the Golden Rule level of capital per-worker. What optimal savings rate is necessary to achieve the Golden Rule equilibrium? Lastly, find the maximized consumption per-work. (round answers to two decimals, if necessary) d) (4 points) To achieve the optimum Golden Rule consumption level, policy makers (recalling training in their undergraduate economics course) argue that they can instead modify the population growth rate. Explain how this can be achieved using a diagram to justify your thoughts. Afterwards, find the necessary population growth rate to achieve the Golden Rule consumption level. Upload Choose a File
Transcribed Image Text:Wonka Land has an aggregate production function given by the equation: Y=K^(1/5) (L)^(4/5). Examining the economy, we find the current savings rate is 45%, capital depreciates at a rate of 5%, and the current population growth rate is 10%. a) (2 points) What is the per-worker production function? b) (6 points) Find the steady-state levels of capital per-worker, output per-worker, and consumption per-worker. (round answers to two decimals, if necessary) c) (6 points) Calculate the Golden Rule level of capital per-worker. What optimal savings rate is necessary to achieve the Golden Rule equilibrium? Lastly, find the maximized consumption per-work. (round answers to two decimals, if necessary) d) (4 points) To achieve the optimum Golden Rule consumption level, policy makers (recalling training in their undergraduate economics course) argue that they can instead modify the population growth rate. Explain how this can be achieved using a diagram to justify your thoughts. Afterwards, find the necessary population growth rate to achieve the Golden Rule consumption level. Upload Choose a File
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