The aggregate change of consumption, Ċ(t) and the aggregate change of the capital stock, K(t), are given by the following system of differential equations: Č(t) = (0.25K(t)-0.7-0.04)C(t) K(t) = 1.4K(t)0.2 – 0.06K (t) – C(t) (a) Find the steady-state of the capital stock and consumption
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- If RGDP as measured by the Product Market is shown to be $14T, explain what you would expect RGDP as measured by the Factor Market to be, and why?Assume that the average or mean monthly household consumption expenditure for Malaysia rose from RM3,578 in 2018 to RM4,033 in 2020, growing 6% per annum at nominal value, according to the statistics department. However, in terms of real value — which refers to the constant price using the Consumer Price Index with the base year 2014 as the deflator — annual growth rate is 3.9% for the same period, mentioned on its Household Expenditure Survey Report 2020. a) Suppose that consumer spending initially rises by RM5 billion for every 1 percent rise in household wealth and that investment spending initially rises by RM20 billion for every 1 percentage point fall in the real interest rate. Also, assume that the economy’s multiplier is 4. i. If household wealth falls by 5 percent because of declining house values, and the real interest rate falls by two percentage points, in what direction and by how much will the aggregate demand curve initially shift at each price level? ii. In what…In an economy, the future marginal product of capital is MPKf=100-K, where K denotes the future capital stock. The price of capital is 100, the depreciation rate of capital is 0.1 and the current capital stock is 10. An equation relating desired investment (I) to real interest rate (r) is
- Neoclassical Production Function Please write the production function in its simplest form (human capital being included in TFP) and explain the nature of each factor of production.What principle would be relevant to the understanding of variation of factors of investment in the SR and LR?If one of the item in a simple aggregate price index is milk, the index will be unchanged if the price of milk is expressed in dollars per quart instead of dollars per gallon. In a Passche index, prices are weighted according to the quantities of the various items in the base period. The Consumer Price Index is a simple aggregate index.One application of the Consumer Price Index is to automatically increase wages or benefits through its inclusion in labor contracts. "Real income" refers to the amount money available after government taxes have been paid. The Producer Price Index measures changes in the physical volume or quantity of output of manufacturing, mining, and electric and gas utilities. TRUE OR FALSE
- Find the value of output if the given sales is $80 and the change in stock is $15??? National incomeSuppose a grocery store's sales are 200,000 TL in one year. During this same time period, the firm paid 50,000 TL for grocery stock sold, 70,000 TL for wages and salaries, 20,000 TL on taxes and insurance, and 10,000 TL on other expenses. At the beginning of this period, the grocery store owner had received the following two offers:He could rent the store to another grocer and work for a large chain in which case he wouldmake a return of 35 ,OOO TL during that year (including his salary).Offer II: He could have sold the store and invested in a stock which together would have yielded a returnof 35,000 TL during that year, and gotten a job paying 15,000 TL. He declined both offers. a.What is the difference between explicit and implicit costs to a firm? What is the implicit cost of the businessin question?b.Calculate his economic profits for the year.c.Was his decision to keep the grocery store economically rational? Explain why or why not. By referring tothe relevant concepts.Suppose the marginal product of labor in the economy is given by MPN = 200 – 0.5N, while the supply of labor is 100 + 4w Find the market-clearing real wage rate What happens if the government imposes a minimum wage of 40? Is there involuntary unemployment? What happens if the government imposes a minimum wage of 60? Is there involuntary unemployment?
- If firms produce goods but does not sell them to final consumers these increases in inventory accumulation are counted as A.) Business investment B.) Depreciation C.) Research and development cost D.) Government spendingMacropoland, a country that is a natural gas and oil importer, has a natural rate of unemployment (at the full employment level of GDP) that is about 4.5%, and the long run average rate of inflation over time has been about 2%. However, during the period 1973-1974, the country experienced an inflation rate of about 15% while simultaneously experiencing unemployment of nearly 13%.At the present time, Macropoland is experiencing very sluggish consumption and investment (a result of a fall in the housing market), and unemployment has again edged up to around 9%. Inflation is very low at 0.4%.Macropoland has just hired you as their economic advisor. You have a big job ahead of you. Using your knowledge of aggregate demand and aggregate supply, can you explain what happened in these two time periods?Develop a response that includes examples and evidence to support your ideas, and which clearly communicates the required message to your audience. Organize your response in a clear and logical…Why is the consumer price index not a good measure of industrial price increases?