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
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
Chapter7: Economic Growth: Theory And Policy
Section: Chapter Questions
Problem 3DQ
Related questions
Question
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
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
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
Step by step
Solved in 2 steps with 2 images
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, economics and related others by exploring similar questions and additional content below.Recommended textbooks for you