Country A produces GDP according to the following equation: GDP = 5√K. The country has adepreciation rate of 5%. What does this country's savings rate need to be in order to sustain asteady-state GDP of $118?Put your answer into percentage form (e.g. 30.57% not 0.3057) and then round to two decimal places.You do not need to include the % sign. Suppose that average incomes today were $50,790 and are expected to grow at 3.1% each year forthe next 120 years. The president is considering a policy which would increase the growth rate to4.3%.How much higher would the average income be in 120 years if this policy is enacted?Round your final answer to two decimal places.

DISCLAIMER “Since you have asked multiple question, we will solve the first question for you. If…

depreciation rate of 5%. What does this country's savings rate Reed to be in order to sustaina steady-state GDP of $118? Put your answer into percentage form (e.g. 30.57% not 0.3057) and then round to two decimal places. You do not need to include the % sign.

depreciation rate of 5%. What does this country's savings rate Reed to be in order to sustaina steady-state GDP of $118? Put your answer into percentage form (e.g. 30.57% not 0.3057) and then round to two decimal places. You do not need to include the % sign.

Economics Today and Tomorrow, Student Edition

1st Edition

ISBN:9780078747663

Author:McGraw-Hill

Publisher:McGraw-Hill

Chapter13: Measuring The Economy's Performance

Section13.1: National Income Accounting

Problem 5R

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Question

Country A produces GDP according to the following equation: GDP = 5√K. The country has a
depreciation rate of 5%. What does this country's savings rate need to be in order to sustain a
steady-state GDP of $118?
Put your answer into percentage form (e.g. 30.57% not 0.3057) and then round to two decimal places.
You do not need to include the % sign.

Suppose that average incomes today were $50,790 and are expected to grow at 3.1% each year for
the next 120 years. The president is considering a policy which would increase the growth rate to
4.3%.
How much higher would the average income be in 120 years if this policy is enacted?
Round your final answer to two decimal places.

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