Suppose that an economy is characterized by the following production function: Y= 3K/N Suppose that depreciation rate (6) equals 0.02 and the saving rate 0.1. What is the steady state level of output per worker?

Suppose that an economy is characterized by the following production function: Y= 3K/N Suppose that depreciation rate (6) equals 0.02 and the saving rate 0.1. What is the steady state level of output per worker?

Managerial Economics: A Problem Solving Approach

5th Edition

ISBN:9781337106665

Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Publisher:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor

Chapter5: Investment Decisions: Look Ahead And Reason Back

Section: Chapter Questions

Problem 8MC

See similar textbooks

Related questions

Q: Assess one (1) problem associated with using gross domestic product as an indicator of economic…

A: The gross domestic product(GDP) of an economy is defined as the market value of all the final…

Q: Write out the Solow Equation for the growth rate of capital per worker as a function of y/k, s, n,…

A: The Solow growth model advocates that the growth rate(GR) of the economy depends upon the growth…

Q: An economy has the per-worker production function yt=f(kt)=4kt)0.4, where yt is the output per…

A: The per worker production function, fkt= yt= 4kt0.4 Depreciation rate = δ= 0.15 Population growth…

Q: Consider the production function Y =(AK" L ). Suppose both saving rate (s) and the depreciation rate…

A: Note:- Since we can only answer up to three subparts, we'll answer first three. Please repost the…

Q: Question 9. Suppose that an economy has the following production function: Y = F(K, L) = K©.a 20.7,…

A: Production functions: The technical relationship between quantities of physical inputs and…

Q: A country has the per-worker production function: 2/3 Y, = 6k %3D where y, is output per worker and…

A: Per worker production function is yt = 6Kt2/3 yt = Output per worker kt = Capital-labor ratio…

Q: Continued long-run economic growth requires that economies: Select one: a. have institutions in…

A: When evaluated as a rise in people's real income, economic growth indicates that the ratio b/w…

Q: Please explain the effect of public expenditure on economic growth?

A: According to the given question In simple words we can say that a public expenditure is an…

Q: An increase in research productivity: Suppose the economy is on a balanced growth path in the Romer…

A: a) As we know that, growth rate of y = growth rate of knowledge. These both are equal to,

Q: Suppose, in a country, the production function is Y = K1/3L2/3. 1. National saving rate is 25…

A: Steady state is reached where breakeven investment is equal to savings. At steady state, output and…

Q: 1. A country has the per-worker production function: Yt = 6k?3 where y, is output per worker and k,…

A: 1. steady-state value of the capital-labor ratio2. steady-state value of output per worker3.…

Q: Consider an economy with the following parameters: Cx=0.5 s=0.4, savings/investment rate d=0.04,…

Q: A country has the per-worker production function yt=6(kt)0.5, where yt is output per worker, and kt…

A: Given: Production function yt=6(kt)0.5 capital depreciation rate (d)=0.1, population growth rate (n)…

Q: Production function) Y = 4Vk Investment function) I = 0.1Y Depreciation function) D = .02K Calculate…

A: Solow's growth model is designed to show how growth in the capital stock, growth in the labor force,…

Q: Suppose that there is a constant technological progress (A) and population growth (n) in a sample…

Q: 3. If the production function is given by y=k;"3 where y; where y; is the output per worker and kt…

A: The production function given: f(k) = yt = kt1/3 s = δ + 0.4 The steady state capital, k* has a…

Q: Suppose, z is given as 2, s is 0.14, depreciation rate is 0.06, and growth rate of labour is 0.08.…

A: Steady state is reached where capital per worker is constant, that is where investment is equal to…

Q: A country has the per-worker production function: Y; = 6k?/3 where y is output per worker and k, is…

A: Per worker production function is yt = 6Kt23 yt = Output per worker kt = Capital-labor ratio…

Q: Consider a closed economy in which the population grows at the rate of 2% per year. The per-worker…

A: At steady state, capital per worker and output per worker remain constant. Steady state is reached…

Q: 1. Let F(K, AN) denote a production function that satisfies constant returns to scale. For an…

A: Given production function Y=f(K,AN) Labor augmented production function Y--- output K--- capital…

Q: Q)If the economy is in a steady state, then A. both consumption per worker and capital per worker…

A: A steady state of economy is defined as an equilibrium between production growth and population…

Q: Assume the per-worker production function is y = k1/2, depreciation is 4 percent of capital, the…

A: We are going to use the expression of Steady State Capital per worker to answer this question.

Q: Suppose that the population growth (gN) is 3% p.a., technological progress is 0,001% p.a. (gA) and…

Q: Only answer the 2nd MCQ question of the growth rate of output per capita

A: The production function explains the relationship between input and output.

Q: Why do large differences in capital per worker lead to relatively small differences in predicted GDP…

A: The marginal product of capital (MPK) continues to decline while the overall development is still…

Q: The production function for the economy is Y = 5K05L05. The population growth rate is 5%, the…

A: GIVEN Y = 5K^0.5, L^0.5 depreciation rate, δ= 0.15 savings Rate, S=0.25. y=Y / L = 5(K /L)^0.5…

Q: Technology (Production Function): Yt = 10 (Kt)0.3 (Lte)0.7 Consumption function: Ct = 0.8Yt…

Q: In 2017, the productivity level of both Germany and the US was $ 72 per hour. Germany's productivity…

A: Productivity indicates the efficiency of inputs used in a production process. It measures the ratio…

Q: When the saving rate is relatively high, this implies that the steady state level of capital per…

A: Steady-state is a situation in Solow model growth of output is constant. to keep the growth of…

Q: The long-run effects of an increase in the saving rate include...? a. a higher level of…

A: We assume that the factors of production have diminishing returns to scale. So if the savings rate…

Q: 5.2 Consider the following economy: FYI: for this production function() = A Parameter Value…

A: Economic growth refers to the increase in the GDP or income of a country over a period such as a…

Q: Suppose there is an increase in the saving rate. We know that this will cause an increase in which…

A: Solow growth model is an exogeneous growth model which argues that in the short run growth is…

Q: If an economy's GDP will double in 15 years, then its growth rate must be about: 7%…

A: Rule of 70 is a very helpful way to estimate the time required for an investment to double given the…

Q: Suppose the people in a certain economy decide to stop saving and instead use all their income for…

A: Savings are defined as the money that a person has left over after they spend part of the income on…

Q: Suppose that an economy is characterized by the following production function: Y=3 K/N Suppose that…

A: Hi! thank you for the question but as per the guidelines, we answer only one question at a time…

Q: In the steady state, _____ consumption per worker is maximized. investment per worker exceeds…

A: The concept of steady state is given by the Solow-Swan in their model of economic growth. This model…

Q: Assume that a country experiences a permanent increase in its saving rate. Which of the following…

A: A permanent increase in savings rate could impact various variables in the economy for long or short…

Q: If an economy described by the production functionY= K has 30% of output invested in new capital and…

A: At steady state capital remain constant, that is rate of change in capital stock is zero. This…

Q: input

A: Growth accounting helps us to understand contribution of different factors towards growth. Labor,…

Q: if real GDP grows at an annual rate of 3.4% and the population grows at an annual rate of 1.6% then…

A: Real GDP per capita = real GDP / Population So, Growth in Real GDP per capita = Growth in real GDP -…

Q: Consider two countries with the following aggregate production functions: Y, = 5K,3(AL), Y, =…

A: Since you have provided multiple parts question, we will solve the first three parts for you. If you…

Q: Consider an economy with the following parameters: a =0.5 s=0.6 , savings/investment rate d=0.04,…

A: The Solow–Swan model, sometimes known as the exogenous growth model, is a long-run economic growth…

Q: Suppose some of the country's capital is suddenly destroyed. If the depreciation rate, savings rate,…

A: When this happens, we've reached what's called the Steady-State Level of Capital. The steady-state…

Q: Assuming an economy is at steady state, with the use of an appropriate diagram with descriptions…

A: A steady-state economy is one that is designed to strike a balance between economic development and…

Q: QUESTION 7 Suppose that an economy is characterized by the following production function: Y= 3/K/N…

A: 7.

Question

Solve question number 7 onlys now . I upvote definitely.

Suppose that an economy is characterized by the following production function:
Y= 3K/N
Suppose that depreciation rate (6) equals 0.02 and the saving rate 0.1. What is the steady state level of output per worker?

Expert Solution

This question has been solved!

Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.

This is a popular solution!

SEE SOLUTION Check out a sample Q&A here

Step 1

VIEW

Step 2

VIEW

Step 3

VIEW

Trending now

This is a popular solution!

Step by step

Solved in 3 steps

SEE SOLUTION Check out a sample Q&A here

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.

Similar questions

Consider an economy described by the production function: Y = F(K, L) = K^0,3L^0,7 A. What is the per-worker production function? B. Assuming no population growth or technological progress, find the steady-state capital stock per worker, output per worker, and consumption per worker as a function of the saving rate and the depreciation rate.
An economy has the per-worker production function yt=f(kt)=4kt)0.4, where yt is the output per worker and kt is the capital-labor ratio. The depreciation rate is 0.15, and the population growth rate is 0.04. Saving is St=0.5Yt, where St is total national saving and Yt is total output. The slope of the per worker production function is given by f' (kt)=1.6kt-0.6 . What is the steady state value of capital-labor ratio, k*? Round your answer to at least 2 decimal places.
Assuming an economy is at steady state, with the use of an appropriate diagram withdescriptions illustrate the impact of a reduction in the saving rate on capital perworker and output per worker.
Consider an economy described by the production function Y=F(K, L)=?^0.4?^0.6 A) What is the per-worker production function?B) Assuming no population growth or technological progress, find the steady-state capital stock per worker, output per worker, and consumption per worker as a function of the saving rate and the depreciation rate.
Question 2 Its production function is 2 times the square root of k (the same as 2k1/2) and its depreciation rate is 3 percent. Its population grows at a rate of 4 percent per year, and technology is advancing at a rate of 1 percent annually. Its residents consume 90% of each additional dollar of income. Find the economy's steady state level of capital (k*), carefully following all numeric instructions.
if real GDP grows at an annual rate of 3.4% and the population grows at an annual rate of 1.6% then at approximately what rate is the real GDP per capital growing?
Suppose that the production function for an economy is given by Y = K1/4L3/4. The depreciation rate is 4%, the saving rate is 12%, Explain how the economy goes from one steady state to another.
an economy is given by y=k^( 1/3). The depreciation rate is 16%, the saving rate is 26%, the growth rate of the labor force is 4%, and the growth rate of labor-augmenting technological change is 4%. Given these features, this economy's steady-state level of capital per effective worker is (Enter your response rounded to two decimal places.)
Suppose that the production function for an economy is given by Y = K1/4L3/4. The depreciation rate is 4%, the saving rate is 12%, Show the steady state in a graph. In the same graph, show the effect of a decrease in the depreciation rate, say to 2%
Say an economy begins with an initial level of capital per worker, k0, that is above its steady state level of capital per worker, k*. All else equal, what will happen to output per worker and capital per worker?
Suppose a company discovers a breakthrough lubricant that reduces the amount of wear on mechanical systems. How will this affect the nation's steady-state level of capital per worker and income per worker? Use either a graph or equation to support your answer.
Suppose that production in an economy is represented by the production function Y = K1/4. If the investment rate is equal to 0.25 and the depreciation rate is equal to 0.10, calculate the steady-state levels of capital and output.