The assumption of the Baumol model implies that production in the public sector exhibits constant returns to scale. True or false, and explain
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A: Autonomous consumption = $1000 Marginal propensity to consume = 0.75 Taxes = $800 Transfers = $300…
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A: Answer to the question is as follows :
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A: * SOLUTION :-
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A: Equilibrium level of income is Y = C + I + G
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A: Answer to the question is as follows:
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A: The multiplier (K) can be calculated using the following formula.
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A: Given national income model :- Y = C + I0 + G C = a + b ( Y – T) G = g Y
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Q: • Assuming that there is no government spending or trade, an economy's GDP is the sum of domestic…
A: Answer -
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Q: Let the national income model be; Y = C + I0 + G , C = a + b ( Y – T) , G = g Y…
A: Given equations:- Y = C + I0 + G C = a + b(Y - T) G = gY
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A: We are going to find the matrix representation form for IS curve equation.
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- which of the followings is NOT an assumption of the harrod -domar model? a-closed economy b-capital is the only factor of production c-variable marginal and average propensity to save d-fixed capital-output ratio– Consider the following one-period model. Assume that the consumption good is produced by a linear technology: Y = zN D where Y is the output of the consumption good, z is the exogenous total factor productivity, N D is the labour hours. Government has to finance its expenditures, G, using a tax on the representative firm. The government collects t units of consumption goods from the firm for each unit of labor it employs (0 < t < 1). There is no other tax in the economy. The firm is owned by the representative consumer who is endowed with h hours of time she can allocate between work, NS and leisure, l. Preferences of the representative consumer are: U(c, l) = ln c + ln l (1) ) Solve for the leisure, l, the consumption, c, employment, N, wage rate, w, tax rate, τ , and output, Y in equilibrium.Consider again the canonical OLG model with log preferences and a Cobb-Douglas production function, but assume that individuals now work in both periods of their lives. (a) Define a competitive equilibrium and the steady-state equilibrium. (b) Characterize the steady-state equilibrium and the transitional dynamics in this economy. (c) Can this economy generate overaccumulation?
- For a competitive equilibrium in a two-period model, must there be an equal amount of borrowing and lending?Suppose that the marginal cost of extracting a non-renewable natural resource is MXC(Q) = 10 and the marginal beneÖt of using the resource are MB(Q) = 90Q. In the context of a static model, address the following question: Calculate the efficient value of Q if the total stock of the natural resource is Q = 50: Provide a graphical representation of the solution.In the Faustmann model, what factors determine the marginal benefits and marginal costs of allowing a stand of trees to continue to grow for another year, and therefore the dynamically efficient harvest interval?
- Consider the one-sector Schumpeterian model in discrete time analyzed in the previous exercise, except that now (.) denotes the probability of innovation, and each innovation improves the quality of a machine q to λq, where λ > 1. Suppose that when a new innovation arrives a fraction ϕ of workers employed in the final good production are unable to adapt to this new technology and need to remain unemployed for one time period to “retool.” (a) Define the equilibrium and steady-state (BGP) allocations. [Hint: also specify the number of unemployed workers in equilibrium.] (b) Define the appropriate generalization of the steady state for this economy, and determine the number of unemployed workers in this equilibrium. (c) Show that the economy experiences bursts of unemployment followed by periods of full employment. (d) Show that a decline in ρ increases the average growth rate and the average unemployment rate in the economy.Suppose that the marginal cost of extracting a non-renewable natural resource is MXC(Q) = 10 and the marginal benefit of using the resource is MB(Q) = 90Q. In the context of a static model, address the following questions. (a) Calculate the efficient value of Q if the total stock of the natural resource is Q = 50: Provide a graphical representation of the solution.Given the following demand and supply functions for the cobweb model, find theintertemporal equilibrium price and determine whether the equilibrium is stable.
- Assume that Trinbago is a small country that produces wine and motor vehicles, where motor vehicles are capital intensive. Trinbago is also capital intensive, and the standard Heckscher -Ohlin (H-O) assumptions hold. The other country in the model is Vincyland. please conclude your findingsCarefully examine and discuss the major differences of the Mundell Fleming Model in the short run as opposed to in the long run. Thereafter, analyse the impact of these differences on the Model. (provide graphical illustrations where needed)The (2 factor,2good,2countries) Heckscher-Ohlin model is based on neoclassical production functions ."Describe the main assumption and characteristics of these production functions.