2. A country has the per-worker production function y = 5k05, where ye is output per worker and y, is the capital-labor ratio. The depreciation rate is 0.2 and the population growth rate is 0.05. The saving function is Se=0.4Y, where Se is total national saving and Yis total output. a) Calculate the steady-state value of the capital-labor ratio, output per worker, and consumption per worker. b) Draw a graph to show how the steady state values will change when the population growth rate increases. Show the original and new steady state on the graph. State how the steady state k, y, and c change.

2. A country has the per-worker production function y = 5k05, where ye is output per worker and y, is the capital-labor ratio. The depreciation rate is 0.2 and the population growth rate is 0.05. The saving function is Se=0.4Y, where Se is total national saving and Yis total output. a) Calculate the steady-state value of the capital-labor ratio, output per worker, and consumption per worker. b) Draw a graph to show how the steady state values will change when the population growth rate increases. Show the original and new steady state on the graph. State how the steady state k, y, and c change.

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

An economy has the per-worker production function yt=f(kt)=4kt)0.4, where yt is the output per worker and kt is the capital-labor ratio. The depreciation rate is 0.15, and the population growth rate is 0.04. Saving is St=0.5Yt, where St is total national saving and Yt is total output. The slope of the per worker production function is given by f' (kt)=1.6kt-0.6 . What is the steady state value of capital-labor ratio, k*? Round your answer to at least 2 decimal places.
Suppose that for a particular country, the savings rate is 20%, the capital–output ratio is 4, the depreciation rate is 1%, and the rate of growth of the population is 2% per year. a) Calculate the rate of growth of overall GDP. b. What is the rate of per capita GDP growth? c. What should the savings rate be to get the growth rate of overall GDP to 8%?
Consider two developed and developing countries, the population growth rate of developed countries is 2 percent per year and saving rate of 30 percent. The developing country has a population growth rate of 5 percent and saving rate of 10 percent. Suppose that initial technology of the developed country is 10 times higher than that of the developing country and that both countries have the same productivity growth and depreciation rate: g - 0.02 and 5=0.03. Assume that a - 1/ 3. In a steady state, how much is the developed country's GDP per capita larger than the developing country?
Two countries B and C have a production function Y= AK^1/3 L^2/3 The population growth rate is 0.1, physical capital depreciates at the rate of 0.1, and A = 1. In country B the saving rate is sB=0.2 and in country C the saving rate is sC=0.4. Write the production function in terms of output per capita (Y/N) and find the steady-state values of the capital-labour ratio (K/N) in both countries.
Suppose that the production function is Y=K^((1)/(3))(EL)^((2)/(3)) where E is the efficiency of labor. (a) Derive the per-efficiency-unit-of-labor production function. (i.e., y=f(k)= Y//EL) (b) Solve for the steady state value of y as a function of s,n,g, and d (c) A developed country has a savings rate of 28% and a population growth rate of 1% per year. A less-developed country has a saving rate of 10% and a population growth of 4% per year. In both countries, g=0.02 and d=0.04. Find the steady state value
Social infrastructure and the investment rate. Suppose that rates of return to capital are equalized across countries because the world is an open economy, and suppose that all countries are on their balanced growth paths. Assume the production function looks like Y = IKaL1-a, where I reflects differences in social infrastructure. (a) Show that differences in I across countries do not lead to differences in investment rates. (b) How might social infrastructure in general still explain differences in investment rates?
Suppose that the production function is Y= 10(K)1/4 (L)3/4 and capital lasts for an average of 50 years so that 2% of capital wears out every year. Assume that the rate of growth of population equals 0. If the saving rate, s =0.128, calculate the steady-state level of capital per worker, output per worker, consumption per worker, saving and investment per worker and depreciation per worker.
QUESTION 4 In the Solow model, if a country's saving rate increases, the country: a. Stays at a constant high steady state b. Stays at a constant low steady stateC. Moves from a relatively low steady state to one that is higher d. Moves from a relatively low steady state to one that is lower, e. Moves from a relatively high steady state to one that is lower Clear my choice If the current capital stock per person in South Korea is greater than the current capital stock per person in China and total factor productivity is the same in both countries, according to the Solow model: a. Both South Korea and China initially will grow at the same rate and have the same steady state b. China initially will grow faster than South Korea, but each will have the same steady state c.China initially will grow faster than South Korea and will have a higher steady state d. China initially will grow slower than South Korea, but each will have the same steady state е. China initially will grow faster than…
an economy is given by y=k^( 1/3). The depreciation rate is 16%, the saving rate is 26%, the growth rate of the labor force is 4%, and the growth rate of labor-augmenting technological change is 4%. Given these features, this economy's steady-state level of capital per effective worker is (Enter your response rounded to two decimal places.)
Suppose that the production function for an economy is given by Y = K1/4L3/4. The depreciation rate is 4%, the saving rate is 12%, Find the steady-state capital-labor ratio, real GDP per worker, investment per worker and consumption per worker for this economy.
This question is about the Solow model. For 2 countries, 1 and 2 which has the same rate of population growth and depreciation and the same saving rate, and are in initial steady state, their capital have equal importance for production for both countries with the same value of α = 1/2 a. In the initial steady state, country 1 has 2 times the output per capita to country 2 because of its greater productivity A. Please use the steady-state equation to find the ratio of the 2 countries’ ratio of productivity and explain it. b. Find the 2 countries’ ratio of capital per capita and explain it. c. Please explain in detail if the capital owners in country 1 are motivated to move their capital from country 1 which is capital abundant, to country 2 which is more capital scarce? Hint: the 2 countries’ payment per unit of capital d. Does workers in country 2 motivated to immigrate to country 1? Please explain from the perspective of the 2 countries’ wages.
Refer to Problem 1 for data and assume now that the population growth rate increases to 5%. Calculate the new steady state values of the capital-labor ratio and output. Explain your answer graphically and compare the new values of the capital-labor ratio and output per worker to those obtained in Problem 1. Problem 1 The following graph describes Chile’s economy before the devastating earthquake of February 27, 2010. Assume Chile was its steadystate capital-labor ratio before the earthquake. a) On the same graph, identify the new capital-labor ratio immediately after this event. b) Describe how the capital-labor ratio will change in the aftermath of Chile’s earthquake.