False and Please provide a concise explanation of this as well as an explanation with a diagram, if its possible to do." If there are free flows of capital in an open economy, all countries share a common production function and technology, and have the same depreciation rate, we would expect to observe unconditional convergence of levels of per capita output, but not per capita consumption.
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"Say whether following statement is True or False and Please provide a concise explanation of this as well as an explanation with a diagram, if its possible to do."
If there are free flows of capital in an open economy, all countries share a common production function and technology, and have the same
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- Which of the following statements are correct? state which ones are definitely incorrect and why. a. Capital grows when investment is higher than depreciation b. The growth rate of capital increases when investment is higher than depreciation c. For a given rate of depreciation of capital, a rise in the ratio of investment to capital will raise the growth rate of capital d. There are no rich countries wth low investment ratios, and no poor countries with high investment ratios e. A country can only invest more than it saves if it borrows from abroad. f. The scatter diagram of capital output ratios vs investment rates does not show a perfect correlation. Therefore there is something wrong with the model of the way capital grows g. A country that increases its saving rate will be able to have more rapid growth of capital for as long as it maintains this higher savig rate h. A country that increases its saving rate will be able to have more rapid…Question 1:In Ghana, the capital share of GDP is about 40 percent, the average growth in output is about2 percent per year, the depreciation rate is about 3 percent per year, and the capital–output ratiois about 1.5. Suppose that the production function is Cobb–Douglas and that Ghana has beenin a steady state.a. What must the saving rate be in the initial steady state? [Hint: Use the steady-staterelationship, sy = (δ + n + g)k.]b. What is the marginal product of capital in the initial steady state?c. Suppose that public policy alters the saving rate so that the economy reaches the GoldenRule level of capital. What will the marginal product of capital be at the Golden Rule steadystate? Compare the marginal product at the Golden Rule steady state to the marginal productin the initial steady state. Explain.d. What will the capital–output ratio be at the Golden Rule steady state? (Hint: For the Cobb–Douglas production function, the capital–output ratio is related to the marginal product…Y2 Assume that neither country experiences population growth or technological progress and that 4 percent of capital depreciates each year. Assume further that country A saves 14 percent of output each year and country B saves 26 percent of output each year. Using your answer from part b and the steady-state condition that investment equals depreciation, find the steady-state level of capital per worker (?∗)(k∗), income per worker (?∗)(y∗), and consumption per worker (?∗)(c∗) for each country. For Country A and For Country B ?∗k∗ for Country A: ?∗k∗ for Country B: ?∗y∗ for Country A: ?∗y∗ for Country B: ?∗c∗ for Country A: ?∗c∗ for Country B:
- In bullet points, outline how the citizens of a foreign country benefit from the direct investment by a foreign Firm in their country's economy, for example how the citizens of a developing county, such as Sierra Leone, would benefit when a large, international corporation would open a new production facilities in their country?please answer the following, I have attached an image of the question for better format. Thanks! 3. Suppose that the production function of a country is given by Y=KaL1-a, where 0<a<1, Y is output, L is labour, and K is capital, Derive the equation for steady state capital per worker, output per worker, and consumption per worker in terms of the saving rate (s) and depreciation rate (d).if European banks lend this extra saving to businesses, which use the funds to build new factories, how might this leads to faster growth in productivity? Develop an argument by providing 2 practical examples.
- Suppose there are two contrasting impacts of a massive war, where a large number of countries were involved (e.g. World War II), on two large countries (Ping and Pong) in the world. Ping suffered a massive destruction of its capital stock relative to its population, while Pong suffered a huge loss of its population relative to its capital stock. That is, capital labour ratio suddenly fell in Ping and rose in Pong. For simplicity that all other things remained same. Assuming that both the country were in steady-state before the war, show the impact of the war on these two countries using a Solow diagram (i.e., capital labour ratio on the horizontal axis and output and savings on the vertical axis). Clearly draw and write your answerUsing the Ramsey-Cass-Koopmans Model, what policy would best improve the economic development of a country? 1) to encourage its citizens to save 2) to gift/aid the country with items that support its production capacity (machineries, harbours, ..) 3) to encourage/transfer know-how and productivity on how to extract outputs from inputs (R&D, patents, institutions, ..) What does the Ramsey model suggest about this question? Explain in detail, supporting your answer with graphs, being explicit about the dynamics of the model and about how you interpret the policy within the model?What is the definition of Capital Flight? What are the causes of Capital Flight? How to recovery from Capital Flight? Summarize the Venezuela economy and oil dependency as an example of Capital Flight. Mention another case of an economy as an example of capital flight. Discuss the causes and consequences in that economy, and suggest some policy can help such economies to recover from capital flight phenomena
- In Ghana, the capital share of GDP is about 40 percent, the average growth in output is about 2 percent per year, the depreciation rate is about 3 percent per year, and the capital–output ratio is about 1.5. Suppose that the production function is Cobb–Douglas and that Ghana has been in a steady state.a. What must the saving rate be in the initial steady state? [Hint: Use the steady-state relationship, sy = (δ + n + g)k.]b. What is the marginal product of capital in the initial steady state?c. Suppose that public policy alters the saving rate so that the economy reaches the Golden Rule level of capital. What will the marginal product of capital be at the Golden Rule steady state? Compare the marginal product at the Golden Rule steady state to the marginal productin the initial steady state. Explain.d. What will the capital–output ratio be at the Golden Rule steady state? (Hint: For the Cobb–Douglas production function, the capital–output ratio is related to the marginal product of…In Ghana, the capital share of GDP is about 40 percent, the average growth in output is about 2 percent per year, the depreciation rate is about 3 percent per year, and the capital–output ratio is about 1.5. Suppose that the production function is Cobb–Douglas and that Ghana has been in a steady state.a. What must the saving rate be in the initial steady state? [Hint: Use the steady-state relationship, sy = (δ + n + g)k.]b. What is the marginal product of capital in the initial steady state?c. Suppose that public policy alters the saving rate so that the economy reaches the Golden Rule level of capital. What will the marginal product of capital be at the Golden Rule steady state? Compare the marginal product at the Golden Rule steady state to the marginal productin the initial steady state. Explain.d. What will the capital–output ratio be at the Golden Rule steady state? (Hint: For the Cobb–Douglas production function, the capital–output ratio is related to the marginal product of…Q4. Suppose that Brazil initially has a higher capital rental rate (r) than the United States. What would be the direction of foreign direct investment (FDI)? Use a world-capital-market graph to show the effects of FDI on the two countries’ rental rates of capital, GDP, and return to labor owners. Identify the net change in world output in the above graph. Discussion: what other effects could FDI cause in the recipient and source countries that are not captured in the model? Your answer
