The People's Republic of China has an estimated $101.54 trillion of capital with a depreciation rate of 5.2% per year. If its GDP is $20.5 crillion and its saving rate is 45% would we expect China's GDP to be growing or shrinking? O growing, I> dK O growing, I< dK O shrinking, I> dK O shrinking, I< dK QUESTION 10 (continued) Based on the numbers in the previous problem economists have calculated that China's capital stock will increase by 3.89% to $105.48 trillion by the end of the year. Does that mean the GDP will also increase by 3.89%? You can use the production function to predict the change in GDP and compare. Use, Y = AKU.4L0.6, and to estimate China's final GDP (in trillions of $s) and then calculate the

The People's Republic of China has an estimated $101.54 trillion of capital with a depreciation rate of 5.2% per year. If its GDP is $20.5 crillion and its saving rate is 45% would we expect China's GDP to be growing or shrinking? O growing, I> dK O growing, I< dK O shrinking, I> dK O shrinking, I< dK QUESTION 10 (continued) Based on the numbers in the previous problem economists have calculated that China's capital stock will increase by 3.89% to $105.48 trillion by the end of the year. Does that mean the GDP will also increase by 3.89%? You can use the production function to predict the change in GDP and compare. Use, Y = AKU.4L0.6, and to estimate China's final GDP (in trillions of $s) and then calculate the

Microeconomics: Private and Public Choice (MindTap Course List)

16th Edition

ISBN:9781305506893

Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Publisher:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson

Chapter14: Investment, The Capital Market, And The Wealth Of Nations

Section: Chapter Questions

Problem 16CQ

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The PH debt as of today amounts to 12 trillion. This balloons with an interest rate of 0.16% yearly. Suppose thegovernment requires every earning individual to pay the debt by 2030, how much each of us would need to paymonthly (annual payment amortized in 12 equal payments), assuming that inflation is 3%, the interest rate is 5.6%compounded daily, and we will start the payment by the end of 2022? The Philippines is estimated to have 110million people, with the work force of around 20%. Show the solution
The Philippine debt as of today amounts to 12 trillion. This balloons with an interest rate of 0.16% yearly. Suppose the government requires every earning individual to pay the debt by 2030, how much each of us would need to pay monthly (annual payment amortized in 12 equal payments), assuming that inflation is 3%, the interest rate is 5.6%compounded daily, and we will start the payment by the end of 2022? The Philippines is estimated to have 110million people, with the work force of around 20%.
Consider a closed-economy. The economywide expected future marginal product of capital is MPKf = 50 − 0.05K^f , where Kf is the future capital stock. The depreciation rate of capital, δ, is 10% per period. The current capital stock, K, is 900 units of capital. The real price of a unit of capital is 8 unit of output. Firms pay taxes equal to 20% of their output. The consumption equation is C = 100 + 0.6Y −100r, where C is consumption, Y is output, and r is the real interest rate. Government spending equals 150 and full-employment output is 1000. (a) Suppose the current real interest rate is 10% per period. What are the values of the tax-adjusted user cost of capital, the desired future capital stock, and the desired level of investment? (b) When the real interest rate equals 10%, what are the desired levels of consumption and saving (assuming output is at the full-employment level)? 10 (c) Is the goods market in equilibrium when the real interest rate equals 10%? Provide an intuitive…
True/False If the real rate of return on investment is higher in the US than in Canada, capital will tend to flow out of the US and into Canada.
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