Consider a closed economy with the following production function. Y=K0.SN0.5. Let the evolution of the capital stock be given by: Kt+1=(1- 8)K+ + Calculate the steady state capital per worker when s=0.3 and 8=0.1 to 2 decimal places.
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- If we have an aggregate production function of the form Y = AK, at what capital-labor ratio can a steady-state equilibrium be reached?Ecuador's economy has a production function that is as follows: Y = K2/5L3/5 The men in Ecuador generally stay home performing household chores while women work. Since the Ecuadorian state television stopped airing soap operas, many men decided to join the workforce and thus the labor force increased by 6.5%. However, recent storms have destroyed much of the capital stock of the country and thus the capital stock shrank by 2.5%. A. Assuming there is no change in total factor productivity in Ecuador, how would the output of Ecuador's economy change? B. How would labor productivity (output per worker) be affected by the increase in labor and decrease in capital stock? Explain. C. Assuming instead that Ecuador's economy grew by 4.9%, what would be the change in total factor productivity in the economy?Assume 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%
- 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?Which of the following is an appropriate solution to the problem of slow real income growth among the unskilled workers in the United States? increasing society’s investment in education restricting exports of jobs restricting access toThe Golden Rule level of capital accumulation is the steady state with the highest level of consumption. Illustrate this statement showing well where the economy would move if it were to move to a new steady state.
- 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.if output is measured as growing at 5 percent during a given business cycle, and input grew at 2 percent over that same time period, then overall labor productivity growth is said to be ?Suppose k = y^1/2, total factor productivity is constant and equal to 1, s = 0.40, and d = 0.10. When the economy reaches the steady state, investment per worker is ________. A.$0.80 B.$1.60 C.$3.20 D.6.40
- The golden rule level of capital accumulation is the steady state with the highest level of consumption.illustrate this statement showing well the economy would move if it were to move to a new steady stateSuppose 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 sameSuppose y = k1/2, total factor productivity is constant and equal to 1, s = 0.40, and d = 0.10. When the economy reaches the steady state, real GDP per worker is ________. A. $2 B. $4 C. $8 D. $16
