Consider an economy that is perfectly open to the world capital market. Suppose that the world rental price of capital (rw) was 0.3, and then it triples. Given that the production function is y=3k^(1/2) 1)The initial level of DGP per worker, y, (when rw was 0.3) is equal to: 5.4 15 3.35 4.5 2)By what factor does the level of GDP per worker changes when rw triples? y’ = 2y y’= 0.33y y’ = 3.003y y’ = 0.5y 3)The new level of GDP per worker, y’, (when rw becomes 0.9) is equal to: 16.2 5 15 10 Give the answer of all.

Consider an economy that is perfectly open to the world capital market. Suppose that the world rental price of capital (rw) was 0.3, and then it triples. Given that the production function is y=3k^(1/2) 1)The initial level of DGP per worker, y, (when rw was 0.3) is equal to: 5.4 15 3.35 4.5 2)By what factor does the level of GDP per worker changes when rw triples? y’ = 2y y’= 0.33y y’ = 3.003y y’ = 0.5y 3)The new level of GDP per worker, y’, (when rw becomes 0.9) is equal to: 16.2 5 15 10 Give the answer of all.

MACROECONOMICS

14th Edition

ISBN:9781337794985

Author:Baumol

Publisher:Baumol

Chapter7: Economic Growth: Theory And Policy

Section: Chapter Questions

Problem 3DQ

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Consider an economy that is perfectly open to the world capital market. Suppose that the world rental price of capital (rw) was 0.3, and then it triples. Given that the production function is y=3k^(1/2) 1)The initial level of DGP per worker, y, (when rw was 0.3) is equal to: 5.4 15 3.35 4.5 2)By what factor does the level of GDP per worker changes when rw triples? y’ = 2y y’= 0.33y y’ = 3.003y y’ = 0.5y 3)The new level of GDP per worker, y’, (when rw becomes 0.9) is equal to: 16.2 5 15 10
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