Consider an economy with a Cobb-Douglas production function. Assume that the labour income share parameter is 1/3. The economy is producing 100 units of output and the productivity parameter is equal to 1. f the depreciation rate for capital is 6%, investment rate is 6%, and there are 125 workers in the economy. Th growth rate in the economy: Select one: a. is positive because the economy is below its steady state. b. is equal to zero because the economy is at its steady state. C. is negative because the economy is above its steady state. d. cannot be determined.

Consider an economy with a Cobb-Douglas production function. Assume that the labour income share parameter is 1/3. The economy is producing 100 units of output and the productivity parameter is equal to 1. f the depreciation rate for capital is 6%, investment rate is 6%, and there are 125 workers in the economy. Th growth rate in the economy: Select one: a. is positive because the economy is below its steady state. b. is equal to zero because the economy is at its steady state. C. is negative because the economy is above its steady state. d. cannot be determined.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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