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.)
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- Suppose some of the country's capital is suddenly destroyed. If the depreciation rate, savings rate, and production function remain unchanged, then the real growth rate will _____ in the short run and the steady-state level of capital will _____ increase, decrease, or stay the same?Using the production function Real GDP = T (L, K), and the LRAS curve, describe the process by which a decline in interest rates impacts the use of capital and economic growth.Suppose some of the country's capital is suddenly destroyed. If the depreciation rate, savings rate, and production function remain unchanged, then the real growth rate will _____ in the short run and the steady-state level of capital will _____ A.increase, decrease B.decrease, decrease C.increase, stay the same D. decrease, stay the same
- Suppose, z is given as 2, s is 0.14, depreciation rate is 0.06, and growth rate of labour is 0.08. Calculate the steady-state capital per worker for this economyAssume that the growth rate of the capital stock in each period is determined by the level of output in the previous period. 1) An economy of 80 million people has ten percent of them engaged in research and development, where their productivity is 0.0035. The economy is on a balanced growth path, when suddenly 2.88 million people move from goods production into R&D, raising the fraction there to 13.6 percent. In the one period that begins with this labor reallocation, the growth rate of output is ________. [Refer to the instruction above.] A) 2.8% B) 0.0% C) 3.8% D) 2.2%Assume the economy is initially in its balanced growth state. Suppose policymakers pursue policies that would increase the saving rate to s1=0.3. Compute the new steady-state values of (i) capital stock per effective worker, (ii) output per effective worker and (iii) consumption per effective worker.
- Q7 An economy has a Cobb–Douglas production function: Y = Kα(LE)1−α The economy has a capital share of 1/3, a saving rate of 24 percent, a depreciation rate of 3 percent, a rate of population growth of 2 percent, and a rate of labor-augmenting technological change of 1 percent. It is in a steady state. a. At what rates do total output, output per worker, and output per effective worker grow?b. Solve for capital per effective worker, output per effective worker, and the marginal product of capital. c. Does the economy have more or less capital than at the Golden Rule steady state? How do you know? To reach the Golden Rule steady state, does the saving rate need to increase or decrease?d. Suppose the change in the saving rate you described in part (c) occurs. During the transition to the Golden Rule steady state, will the growth rate of output per worker be higher or lower than the rate you derived in part (a)? After the economy reaches its new steady state, will the growth rate of…According to investopdia.com,a steady-state economy is an economy structured to balance growth with environmental integrity, seeking to find an equilibrium between production growth and population growth. This type of economy aims for the efficient use of natural resources but also seeks a fair distribution of the wealth generated from the development of those resources. Is this type of economy more plausible than continued, unlimited economic growth? Why or why not?Say an economy begins with an initial level of capital per worker, k0, that is above its steady state level of capital per worker, k*. All else equal, what will happen to output per worker and capital per worker?
- An increase in net investment leads to faster economic growth because capital per worker and output per worker will change in which of the following ways?Capital per Worker Output per worker(A) Increase. Increase(B) Increase. Decrease(C) No change. Increase(D) Decrease. Increase(E) Decrease. DecreaseConsider an economy described by the production function: Y = F(K, L) = K^0,3L^0,7 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.Assume that the rate of growth of population equals 0. Suppose that there is a sudden increase in the rate at which capital depreciates . The production function remains unchanged . a. On a graph , illustrate the effects of this change on the steady - state level of capital per worker if saving rate remains unchanged b. Describe the effects of this change on the Golden Rule level of capital per worker , and explain your answer .