Whether the given statement is false or true.

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Chapter 6, Problem 6RQ

To determine

To evaluate: Whether the given statement is false or true.

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Is the following statement true, false, or uncertain? A one-time increase in the amounts of capital and labor that leaves capital per person unchanged has no effects on the levels of output or output per person in the short run or in the steady state.

Given a closed economy where there is no public sector. Production in the economy can be described by the following production function:Y = F (K, AL) = K^α (AL)^(1−α)where Y is the productive capacity of the economy, K is the capital stock, L is the labor force, and A is knowledge. Think of AL as a single factor of production where knowledge and the amount of labor are multiplied together. Let's call the multiplier (AL) the efficiency of labor. It is given that A = 1.5 and saving is a fixed percentage of production, or s = 33%. The capital stock shrinks by 3% per year, but the population growth is zero. Finally, α = 0.4.Answer the following questions based on the above criteria. (a) Show mathematically that the marginal productivity of labor and capital is positive but diminishing. Explain in words and with a picture what the term positive but diminishing marginal productivity means. (b) Show mathematically that saving and investment are equivalent in a closed economy (c) Show…

Which one is true? labor productivity will be higher when the capital stock is larger and the rate of change in labor productivity remains the same as capital stock goes up. labor productivity will be higher when the capital stock is larger and the rate of change in labor productivity increases as capital stock goes up. labor productivity will be lower when the capital stock is larger and the rate of change in labor productivity remains the same as capital stock goes up. labor productivity will be higher when the capital stock per worker is larger but the rate of change in labor productivity will eventually decrease as capital stock per worker goes up.