Economic Growth II- Work It Out Question 1 An economy has a Cobb-Douglas production function: Y = K (LE)¹- The economy has a capital share of 0.35, a saving rate of 45 percent, a depreciation rate of 5.00 percent, a rate of population growth of 5.50 percent, and a rate of labor- augmenting technological change of 4.0 percent. It is in steady state. c. The economy has capital than at the Golden Rule steady state. To achieve the Golden Rule steady state, the saving rate needs to d. Suppose the change in the saving rate you described in part c occurs. During the transition to the Golden Rule steady state, the growth rate of output per worker will be the rate you derived in part a. After the economy reaches its new steady state, the growth rate of output per worker will be

Economic Growth II- Work It Out Question 1 An economy has a Cobb-Douglas production function: Y = K (LE)¹- The economy has a capital share of 0.35, a saving rate of 45 percent, a depreciation rate of 5.00 percent, a rate of population growth of 5.50 percent, and a rate of labor- augmenting technological change of 4.0 percent. It is in steady state. c. The economy has capital than at the Golden Rule steady state. To achieve the Golden Rule steady state, the saving rate needs to d. Suppose the change in the saving rate you described in part c occurs. During the transition to the Golden Rule steady state, the growth rate of output per worker will be the rate you derived in part a. After the economy reaches its new steady state, the growth rate of output per worker will be

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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2. An economy has a production function: Y 3KtLt. (1) The economy has a saving rate of 24 percent, a depreciation rate of 3 percent, 1 for all period (no population growth). and Lt Yt Lt (a) What is the per-worker production function, yt f(kt)? Define yt Ки Lt and kt (b) Find the equation for the evolution of capital per worker in terms of kt and kt+1 (c) Find the long-run growth rate of output per worker. Now the economy has the following production function: Y 3Kt (2) but savings rate, depreciation rate, and population remain the same
Population Growth and Technological Progress-Work It Out An economy has a Cobb-Douglas production function: Y = K (LE)¹- The economy has a capital share of 0.20, a saving rate of 49 percent, a depreciation rate of 4.00 percent, a rate of population growth of 1.50 percent, and a rate of labor-augmenting technological change of 4.0 percent. It is in steady state. a. At what rates do total output and output per worker grow? Total output growth rate: Output per effective worker is constant in the steady state and does not change. increases in the steady state. declines in the steady state. % Output per worker growth rate: %
Question 3Consider an economy described by the production function:Y = F(K, L) = K0.3 L0.7 a. What is the per-worker production function?b. Assuming no population growth or technological progress, find the steady-state capital stock per worker, output per worker, and consumption per worker as a function of the saving rate and the depreciation rate.c. Assume that the depreciation rate is 10 percent per year. Make a table showing steadystate capital per worker, output per worker, and consumption per worker for saving ratesof 0 percent, 10 percent, 20 percent, 30 percent, and so on. (You will need a calculator with an exponent key for this.) What saving rate maximizes output per worker? What saving rate maximizes consumption per worker?
Y - K"(LE) The economy has a capital share of 0.20, a saving rate of 45 percent, a depreciation rate of 3.75 percent, a rate of population growth of 5.00 percent, and a rate of labor-augmenting technological change of 3.5 percent. It is in steady state. b. Solve for capital per effective worker (k"), output per elffective worker (y"), and the marginal product of capital. k' - y* = marginal product of capital =
YIN CN Next question Suppose that the production function is given by Y- 05VR N 454 where Y is output, Kis capital, and N is the number of workers 4 Suppose that 60 05 With your favonte spreadsheet software, compute steady-state output per worker and steady-state consumption per worker for s 0, 801, a02, s1 Graph the steady-state level of output per worker and the steady-state level of consumption per worker as a function of the saving rate 25 1) Using the multipoint curve drawing tool, drawa curve showing the relationship between YIN and the saving rate. Properly label your curve 15 2) Using the multipoint curve drawing tool, draw a curve showing the relationship between CIN and the saving rate. Properly label your curve 0.5 Although the control ponts for your multpownt curves do not have to be exact try to plot them as accurately as possible 01 02 03 a'4 os o6 07 os 09 Saving rate, At what saving rates are YIN and CIN maximized? After plotting the final point of your multipoint curve…
Suppose an economy begins in steady state. By what proportion does per capita GDP change in the long run in reponse to each of the following changes? Production function is Y=AK^1/3L^2/3 a. Investment rate doubles b. depreciation rate falls by 10% c. Productivity level rises by 10% d. Earthquake destrys 75% of the capital stock e. Generous immigration policy lead the population to double
Economic Growth II – Work It Out Question 1 a. At what rates do total output and output per worker grow? An economy has a Cobb–Douglas production function: Y = K"(LE)'-a Total output growth rate: % The economy has a capital share of 0.20, a saving rate of 41 percent, a depreciation rate of 3.50 percent, a rate of population growth of 6.25 percent, and a rate of labor- augmenting technological change of 2.0 percent. It is in Output per worker growth rate: % steady state. Output per effective worker declines in the steady state. increases in the steady state. is constant in the steady state and does not change.
AK.25L.75 population growth = 3% saving rate=5% depreciation = 12% technology= 9 a. calculate steady state level of output per worker b. calculate steady stae level of consumption per worker c. calculate real GDP's growth rate in the steady state
5. Consider the Solow growth model. The production function is: Y = Kª(AN)!-«, the is the capital depreciation rate is & per year, the population and technology savıng rate grow at annual rates of n and g respectively. Calculate K/N, K/(AN), Y /N and Y/(AN) in the steady state. Does the change in s affect the growth rate? Explain. S, 6. Suppose that the model of the economy is given by Y = C +I+G + X 99 sunny hp 10 f8 144 14 is & 6. 7. 8. 24
4. Assume an endogenous growth model with a production function that in per capita terms can be written as y = 0.8k. If the savings rate is s = 0.3, the rate of growth of population is n = 0.03, and the rate of depreciation is d = 0.1, how high is the rate of growth of output per capita? A. 14% B. 17% C. 13% D. 11% E. There is not enough information to calculate it.
Assume that a country's per-worker production is y = k1/2, where y is output per worker and kis capital per worker. Assume also that 10 percent of capital depreciates per year (= 0.10) 2 andthere is no population growth or technological change.a. If the saving rate (s) is 0.4, what are capital per worker, production per worker, andconsumption per worker in the steady state?b. Solve for steady-state capital per worker, production per worker, and consumption perworker with s = 0.6.c. Solve for steady-state capital per worker, production per worker, and consumption perworker with s = 0.8.d. Is it possible to save too much? Why?
a. Given a per capita production function ofy= k^0.5, a savings rate of 10%, a depreciation rate of 2%, a technological growth rate of 1%, and a population growth of 3%, what is this economy's steady-state level of output per capita. In a sentence, describe over time what is happening to this economy's level of RGDP when the economy is in a steady state. b. Imagine that the economy described in part a of this problem begins time (tO) with 1 unit of capital per effective worker. Assume that investment demand rises at the same rate as real GDP. Further, assume that by time t1 this economy has achieved the steady-state level of capital. On the left-hand side of the plots below, diagram the movement of the requested variables between time to and time t1.