Assume that digital revolution popularizes theuse of artificial intelligence (computers) in theworkplace. The production function becomes:Y = 0.25 K(2/5)(ACN)(3/5)where C stands for the number ofcomputers.:a) Use growth accounting to predict theincrease in total output in response to anincrease in the number of computers by 10percent.b) The nominal interest rate on governmentbonds equals 9 percent and inflation equalspercent. The rate of GDP growth is equal tothe result obtained in (a). Use the debtdynamics equation and graph to explainwhether or not the level of public debt inpercent of GDP can be stabilized if thegovernment runs a primary deficit.c) Use the neoclassical investment model(equation and graphs) to assess the impact ofa decrease in the number of computers oninvestment (in traditional physical capital K).

The mathematical expression that shows the maximum amount of output by using different combinations…

Answered: Assume that digital revolution…

Principles of Economics (MindTap Course List)

8th Edition

ISBN:9781305585126

Author:N. Gregory Mankiw

Publisher:N. Gregory Mankiw

Chapter18: The Markets For The Factor Of Production

Section: Chapter Questions

Problem 9PA

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14. If output is described by the production function Y = AK0.2L0.8, then the production function has: Select one: A. Constant returns to scale and the share of labor in GDP is 0.2. B. increasing returns to scale and the share of labor in GDP is 0.2. C. Decreasing returns to scale and the share of labor in GDP is 0.8. D. constant returns to scale and the share of labor in GDP is 0.8.
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10.14 Total economic output in three years. The n - vector xt denotes the economic output of a country in n different sectors, in yeart. An economist models the economic output using a linear dynamical system model xt+1 = Axt, where A is an n \times n matrix. Assuming her model is correct, find an expression for the total economic output in yeart + 3, in terms of xt and A. (The total economic output is the sum of the economic output in the n sectors.)
Neoclassical Production Function Please write the production function in its simplest form (human capital being included in TFP) and explain the nature of each factor of production.

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