QUESTION 10 (continued) Based on the numbers in the previous problem economists have calculated that China's capital stock will increase by 3.8 $105.48 trillion by the end of the year. Does that mean the GDP will also increase by 3.89%? You can use the production function to predict the change in GDP and compare. Use , Y = AKU.4LO.6, and to estimate China's final GDP (in trillions of $s) and then calculat percent change from its initial GDP of $20.5 trillion. O China's GDP grows but not as fast as the capital stock O China's GDP grows at the same rate as its capital stock O China's GDP grows faster than its capital stock China's GDP doesn't grow. so none of the above
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The growth in the GDP will depend on the contribution of capital towards the GDP growth.
The positive rise in the capital will drive up economic growth.
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- For this question, assume that all price levels are fixed. Now suppose that there is a real depreciation. This real depreciation will cause which of the following to occur? Question 4Answer a. None of the answers b. a reduction in exports c. an increase in imports d. a reduction in net exports e. a reduction in demand for domestic outputwhat is the steady state of equilibrium for capital labor (K) if the national savings rate is 0.14 and the depreciation rate is 0.04?Green accounting refers to the incorporation of depreciation of: a.physical and human capital in national income accounting b.natural capital only in national income accounting c.physical and natural capital in national income accounting d.physical capital only in national income accounting
- If the value of depreciation should ever exceed that of gross private domestic investment, how would this affect the future productivity of the nation ?Fred’s Frisbees is trying to determine how many Frisbee pressing machines to buy for its new factory. The real price of a new pressing machine is 7600 Frisbees. The depreciation rate on these Frisbee presses is equal to 12% per year. The real interest rate is 10%. The expected future marginal product of these fabricating machines is given by the expression 5000 – 4K, measured in Frisbees. (a) What is the user cost of capital? (b) What is the profit-maximizing number of Frisbee presses for Fred’s to purchase for its new factory? (c) Before purchasing the machines Fred’s finds that it will be subject to a new tax of 60 percent on all its revenue. Now what is the profit maximizing number of machines for Fred’s to purchase?Given demand and supply analysis, would the following event lead to an appreciation or depreciation of the £? The inflation rate in the UK is greater than the USAa) Depreciationb) Appreciation
- Assume that the production function for a country is given by Y=√K and annual investment is given by the function I=γ×YI where γ=0.280, and that the yearly depreciation rate is 4.67%. Suppose that this year, the output in the country is 1, and a neighbor country's output is 50% higher. Calculate the time it would take for the country's output to catch up with its neighbor's output. Assume the neighbor country's economy is neither growing nor shrinking.Solve for the steady state of K with: An Investment (I) function with a rate of growth of 0.4 times the square root of K and a depreciation (D) function of 0.03 * K. Now graph what this looks like. Hint: you need to set the production function equal to the depreciation function and solve for k.Apple is selling 30,000 units in Europe at an average price of 1500 euros per unit. Both the spot and forward rates are $1.20/euro. The cost of each unit in dollars is $1300 per unit. The elasticity of demand for Apple computers in Europe is Euro= 1.5. Now consider a depreciation of Euro (relative to US $) from $1.20/ euro to $1.08/Euro and assume zero passthrough. What is Apple's exposure? a. $45 mn b. $20 mn c. Euro 45 mn d. Euro 20 mn
- Question 1:- Suppose a country has a gross savings rate of 25%, a depreciation rate of 2%, and an incremental capital output ratio (lCOR) of 2.2. Using the Harrod-Domar growth model, a) find the implied rate of growth of total GDP in the country. b) How much would the rate of savings have to increase to raise the growth rate of total GDP to 10%? c) Is your answer consistent with the Harrod-Domar model? Explain.Consider an economy’s production function is Y=K^1/3 N^2/3 and that both the saving rate and the depreciation rate are equal to 0.15. A. What is the steady-state level of capital per worker? B. What is the steady-state level of output per worker? Now suppose that the economy has reached its steady-state in period t, and then, in period t+1, the saving rate doubles to 0.30. The depreciation rate remains constant at 0.15. C. Solve for the new steady-state levels of capital per worker and output per worker. D. Calculate the path of capital per worker and output per worker over the first three periods after the change in the saving rate.If the depreciation rate increases from 5% to 10%, it will ___ in the long run. decrease the level of output increase the growth rate of output decrease the growth rate of output not change the level of output