The following question is based on the international factor movement problem. Suppose the capital movement is allowed across borders and the amount of movement from home to abroad is K*K. Under such circumstance, how much is the change of the output for foreign country? (Hint: you need to calculate the foreign output before and after the capital movement) A. d+e+f+g B. d+eC. fD. d E. f+g MPKH a b с K* H h MPKF

The following question is based on the international factor movement problem. Suppose the capital movement is allowed across borders and the amount of movement from home to abroad is KK. Under such circumstance, how much is the change of the output for foreign country? (Hint: you need to calculate the foreign output before and after the capital movement) A. d+e+f+g B. d+eC. fD. d E. f+g MPKH a b с K H h MPKF

Exploring Economics

8th Edition

ISBN:9781544336329

Author:Robert L. Sexton

Publisher:Robert L. Sexton

Chapter20: Economic Growth In The Global Economy

Section: Chapter Questions

Problem 4P

See similar textbooks

Similar questions

Q4. Suppose that Brazil initially has a higher capital rental rate (r) than the United States. What would be the direction of foreign direct investment (FDI)? Use a world-capital-market graph to show the effects of FDI on the two countries’ rental rates of capital, GDP, and return to labor owners. Identify the net change in world output in the above graph. Discussion: what other effects could FDI cause in the recipient and source countries that are not captured in the model? Your answer
Q3. You are given the following information about an economy: Gross private domestic investment = 40 Government purchases of goods and services = 30 Gross national product (GNP) = 200 Current account balance = -20 Taxes = 60 Government transfer payments to the domestic private sector = 25 Interest payments from the government to the domestic private sector = 15 (Assume all interest payments by the government go to domestic households.) Factor income received from rest of world = 7 Factor payments made to rest of world = 9 Find the following, assuming that government investment is zero: (a.) Consumption (b.) Net exports (c.) GDP (d.) Net factor payments from abroad (e.) Private saving (f.) Government saving (g.) National saving
Q3. You are given the following information about an economy: Gross private domestic investment = 40 Government purchases of goods and services = 30 Gross national product (GNP) = 200 Current account balance = -20 Taxes = 60 Government transfer payments to the domestic private sector = 25 Interest payments from the government to the domestic private sector = 15 (Assume all interest payments by the government go to domestic households.) Factor income received from rest of world = 7 Factor payments made to rest of world = 9 Find the following, assuming that government investment is zero: (e.) Private saving (f.) Government saving (g.) National saving
Question 1:In Ghana, the capital share of GDP is about 40 percent, the average growth in output is about2 percent per year, the depreciation rate is about 3 percent per year, and the capital–output ratiois about 1.5. Suppose that the production function is Cobb–Douglas and that Ghana has beenin a steady state.a. What must the saving rate be in the initial steady state? [Hint: Use the steady-staterelationship, sy = (δ + n + g)k.]b. What is the marginal product of capital in the initial steady state?c. Suppose that public policy alters the saving rate so that the economy reaches the GoldenRule level of capital. What will the marginal product of capital be at the Golden Rule steadystate? Compare the marginal product at the Golden Rule steady state to the marginal productin the initial steady state. Explain.d. What will the capital–output ratio be at the Golden Rule steady state? (Hint: For the Cobb–Douglas production function, the capital–output ratio is related to the marginal product…
Explain why converging economies may present a strong argument for limiting flows of capital but not for limiting trade.
Discuss the difference in GDP per capita using the two different exchange rates. Which one is larger? Why? Peru’s GDP per capita in USD using Official Exchange Rate: USD 6,000Peru’s GDP per capita in USD using PPP Exchange Rate: USD 17,418.23
In Ghana, the capital share of GDP is about 40 percent, the average growth in output is about 2 percent per year, the depreciation rate is about 3 percent per year, and the capital–output ratio is about 1.5. Suppose that the production function is Cobb–Douglas and that Ghana has been in a steady state.a. What must the saving rate be in the initial steady state? [Hint: Use the steady-state relationship, sy = (δ + n + g)k.]b. What is the marginal product of capital in the initial steady state?c. Suppose that public policy alters the saving rate so that the economy reaches the Golden Rule level of capital. What will the marginal product of capital be at the Golden Rule steady state? Compare the marginal product at the Golden Rule steady state to the marginal productin the initial steady state. Explain.d. What will the capital–output ratio be at the Golden Rule steady state? (Hint: For the Cobb–Douglas production function, the capital–output ratio is related to the marginal product of…
In Ghana, the capital share of GDP is about 40 percent, the average growth in output is about 2 percent per year, the depreciation rate is about 3 percent per year, and the capital–output ratio is about 1.5. Suppose that the production function is Cobb–Douglas and that Ghana has been in a steady state.a. What must the saving rate be in the initial steady state? [Hint: Use the steady-state relationship, sy = (δ + n + g)k.]b. What is the marginal product of capital in the initial steady state?c. Suppose that public policy alters the saving rate so that the economy reaches the Golden Rule level of capital. What will the marginal product of capital be at the Golden Rule steady state? Compare the marginal product at the Golden Rule steady state to the marginal productin the initial steady state. Explain.d. What will the capital–output ratio be at the Golden Rule steady state? (Hint: For the Cobb–Douglas production function, the capital–output ratio is related to the marginal product of…
Mention another case of an economy as an example of capital flight.Discuss the causes and consequences in that economy,and suggest some policy can help such economies to recover from capital flight phenomena
Mention another case of an economy as an example of capital flight. Discuss the causes and consequences in that economy, and suggest some policy can help such economies to recover from capital flight phenomena.
What is the definition of Capital Flight? What are the causes of Capital Flight? How to recovery from Capital Flight? Summarize the Venezuela economy and oil dependency as an example of Capital Flight. Mention another case of an economy as an example of capital flight. Discuss the causes and consequences in that economy, and suggest some policy can help such economies to recover from capital flight phenomena
Does a trade surplus help to guarantee strong economic growth?