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Suppose the economy of an island behaves as the Solow model (Y=AK1/2L1/2), version 1.0 (constant population). Suppose that the productivity parameter is A=90, the depreciation rate is d=1/10, the savings investment) rate is s=0.10, and the labor force is equal to 2 million (and constant over time). Suppose in year 2010 the economy is in a steady state. Compute the 2010 values for overall capital (K) and income per worker (Y/L). Pick the closest values. The stock of capital is between 6 and 7 million. Income per worker is between 2.5 and 3.3. O None of the other options The stock of capital is between 62 and 66 trillion. Income per worker is between 16000 and 17000. The stock of capital is between 12nd 14 billion. Income per worker is between 4000 and 5000.

Suppose the economy of an island behaves as the Solow model (Y=AK1/2L1/2), version 1.0 (constant population). Suppose that the productivity parameter is A=90, the depreciation rate is d=1/10, the savings investment) rate is s=0.10, and the labor force is equal to 2 million (and constant over time). Suppose in year 2010 the economy is in a steady state. Compute the 2010 values for overall capital (K) and income per worker (Y/L). Pick the closest values. The stock of capital is between 6 and 7 million. Income per worker is between 2.5 and 3.3. O None of the other options The stock of capital is between 62 and 66 trillion. Income per worker is between 16000 and 17000. The stock of capital is between 12nd 14 billion. Income per worker is between 4000 and 5000.

Algebra and Trigonometry (MindTap Course List)
Algebra and Trigonometry (MindTap Course List)
4th Edition
ISBN:9781305071742
Author:James Stewart, Lothar Redlin, Saleem Watson
Publisher:James Stewart, Lothar Redlin, Saleem Watson
Chapter10: Systems Of Equations And Inequalities
Section10.FOM: Focus On Modeling: Linear Programming
Problem 14P
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Problem 2 Suppose the economy of an island behaves as the Solow model (Y=AK1/2L1/2), version 1.0 (constant population). Suppose that the productivity parameter is A=90, the depreciation rate is d=1/10, the savings (investment) rate is s=0.10, and the labor force is equal to 2 million (and constant over time). Suppose in year 2010 the economy is in a steady state. Compute the 2010 values for overall capital (K) and income per worker (Y/L). Pick the closest values. The stock of capital is between 6 and 7 million. Income per worker is between 2.5 and 3.3. O None of the other options The stock of capital is between 62 and 66 trillion. Income per worker is between 16000 and 17000. The stock of capital is between 12md 14 billion. Income per worker is between 4000 and 5000.
Transcribed Image Text:Problem 2 Suppose the economy of an island behaves as the Solow model (Y=AK1/2L1/2), version 1.0 (constant population). Suppose that the productivity parameter is A=90, the depreciation rate is d=1/10, the savings (investment) rate is s=0.10, and the labor force is equal to 2 million (and constant over time). Suppose in year 2010 the economy is in a steady state. Compute the 2010 values for overall capital (K) and income per worker (Y/L). Pick the closest values. The stock of capital is between 6 and 7 million. Income per worker is between 2.5 and 3.3. O None of the other options The stock of capital is between 62 and 66 trillion. Income per worker is between 16000 and 17000. The stock of capital is between 12md 14 billion. Income per worker is between 4000 and 5000.
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