Use the information below to answer questions 30, 31 and 32. Assume in a given economy the initial level of capital per worker K/L =k = 9, Assume also that y = Y/L and is a function of k such that y = Vk the savings rate s = 0 2, the rate of depreciation d = 0.1, using the equation of motion and other equations What is the level of depreciation? Select one O a a 0.9 a 0.6 a. 1.2
Q: in 2019 fiscal year estimated that Ghanaians saved 20 percent of their disposable income; however,…
A: Economy is in equilibrium where Aggregate Expenditure = Aggregate Income . AE = C + I + (G-T)…
Q: List all the equilibrium conditions of this model and Using the equilibrium conditions listed, write…
A: Given , Production function : F = Ka(bN)1-a Growth rate of Labor augmented technology = f No…
Q: Dear Sir/Madam while studying for my macroeconomics course, I came across this case study that I am…
A: Answer: In an open economy, national saving (S) is equal to the sum of investment (I) and current…
Q: M Suppose that GDP (Y) IS 5.000. Consumption (C) is given by the equation C - 500 +.5(Y-T).…
A: Introduction We have given data of income of an economy. The sum of all incomes of the peoples of a…
Q: Consider the economy of Prometheus represented by the following informati Marginal Propensity to…
A: Given Marginal propensity to consume =0.5 Net tax rate =0.1 Autonomous investment =200
Q: On the following graph, plot the relationship between the real interest rate and net capital outflow…
A: The value of a country's exports minus the value of its imports over a specific time period is known…
Q: In an economy the interest rate is 5% and the depreciation rate is 20%. The price of capital is 1. A…
A: Production Function : Y = A K0.5N0.5 Let the cost of capital be (r) & Cost of capital be (w )…
Q: Assume that a nation initially has an output level of 150 units per period and that consumption is…
A: In period 0 nation's output level is 150 and consumption level is also 150. There is no investment…
Q: The equation for the marginal productivity of capital is given by: MPK = 1,000 - 10K The price of a…
A: Given: The marginal productivity of capital is: MPK = 1,000 - 10K The price of a unit of capital is…
Q: Suppose that firms produce according to the production function Y = AK1/2L 1/2 , where A = 5 and L =…
A: The neoclassical theory proposes that the company's degree of investment ought to rely just upon its…
Q: Consider a closed economy. Consider the effects of an increase of LFD in the loanable funds market.…
A: Answer-
Q: Assume that GDP (Y) is 6,000. Consumption (C) is given by the equation C= 600+ 0.6(Y – T).…
A: National savings come from two sources the public sector and the private sector. The private sector…
Q: Suppose the U.S. has an investment opportunity which costs $200 which will increase output from 100…
A: The term "marginal productivity" refers to the change in output (Y) as a function of the amount of…
Q: An economy has full-employment output of 6,000. Government purchases, G, are 1,600. Desired…
A: Equilibrium is reached where production equals aggregate expenditure, that isY= C + I + G
Q: Problem 1A According to the new classical investment model we have: MPK =* (r + 8) (1) i. Derive the…
A: Solution:- i)
Q: 1. Assume that the consumption function is given by C=200+0.5(Y-T) and the investment function is…
A: The “IS curve” derives from the property that it represents that desired investment equals desired…
Q: Q3. Consider the following Cobb-Douglas production function: Y = AL K- where 0 = 0.25 Assuming…
A: (Only first three parts have been solved). The Neoclassical theory of Investment was formulated…
Q: In a closed economy with no government, use the following information to compute the long run level…
A: The Solow Growth Model refers to the exogenous model of economic growth that analyzes Δ in the level…
Q: Savings, Investment, and Deficits Suppose a country has a closed economy, and at first it has the…
A: Real GDP (Y) = 800 Consumption (C) = 560 Government Spending (G) =120 C =c0 + C1(Y-T) Given the…
Q: An economy has full-employment output of 6,000. Government purchases, G, are 1,200. Desired…
A: Full employment refers to the situation where the aggregate supply curve and aggregate demand curve…
Q: Explain all will rate 1) Suppose that people in the economy don't equally share ownership of the…
A: 1) If a part of the capital in the economy gets destroyed, then capital will become scarce in the…
Q: Please help
A: National savings is sum of savings by government, households and companies.When household…
Q: Problem 1A| According to the new classical investment model we have: MPK =(r + 8) (1) i. Derive the…
A: Note: We’ll answer the first question since the exact one wasn’t specified. Please submit a new…
Q: If national saving in a closed economy is greater than zero, which of the following must be true? O…
A: We know that saving is the rest part of income after consumption . Therefore income = Consumption+…
Q: 13) Which of the following is NOT an implication of Ricardian equivalence? a) Tax cuts have no…
A: 13) Which of the following is NOT an implication of Ricardian equivalence? The answer is - d) The…
Q: In an economy, the desired consumption and investment functions are given by, cd = 4500 +…
A: Given: The desired consumption function is: Cd = 4,500 + 0.25Y - 5,000r The desired investment…
Q: 18, U.S. output was $20.5 trillion, and Chinese output in 2017was $13 5 trillion. Suppose that fro…
A: All calculations given below, Equilibrium level were demand is equivalent to supply.
Q: In an economy the interest rate is 5% and the depreciation rate is 20%. The price of capital is 1. A…
A: Given that; Production Function : Y = A K0.5N0.5 Let the cost of capital be (r) & Cost of…
Q: Assume that the four-sector model is at play. C+I+G. All expenditures are autonomous. Given: C- 700…
A: C=700+0.80(1-t)Yt=0.25I=210-75iG=1000TR=100L=0.20Y-40iM/P=800NX=800…
Q: Recent data shows that the aging population in many Asian economies is getting larger in their…
A: Given, The aging population in many Asian economies is getting larger in demographic structure.…
Q: Consider an economy called Xanadu for which desired aggregate consumption depends on income, Y. and…
A: All government consumption, investment, and transfer payments are included in government spending or…
Q: he appropriate curve on the graph to reflect this change. nange in the tax treatment of interest…
A: Scenario 1: Initially, interest income or deposits will be taxed at 20%. Now the tax rate on…
Q: Japan and the United States are major trading partners and the exchange rate between the Japanese…
A: “Since you have posted a question with multiple sub-parts, we will solve first three subparts for…
Q: Consider the following IS–LM model: C = 200 + .25YD, NX =0, I= 150 + .25Y - 1000i , (M/P) = 2Y -…
A: The IS refers to the investment and savings model that equates total investment to equal total…
Q: Consider the following model of an economy operating with fixed wages, prices and interest rates and…
A:
Q: Suppose the marginal product of capital is MPK=2-0.001K, the capital stock depreciates at 20% rate,…
A: Given information Marginal Product of Capital (MPk) = 2 - 0.001k Capital stock depreciation rate =…
Q: Refer to Table 8.9. At an aggregate output level of $400 billion, aggregate saving Select one: a.…
A: Aggregate output is defined as the total amount of goods and services which are manufactured in an…
Q: An economy is currently at it's steady state. Their depreciation rate is 6% and their capital stock…
A: Capital refers to the goods that are used in the process of production of other consumption goods.…
Q: Consider an economy called Xanadu for which desired aggregate consumption depends on income, Y , and…
A: In the question above, it is given that : There's an economy called Xanadu. Desired aggregate…
Q: Consider the following two-period consumption-saving model: Max C (BC2)}, C1,C2 subject to the…
A: The consumption function is an equation that shows how a household's consumption levels change as…
Q: Assume that digital revolution popularizes the use of artificial intelligence (computers) in the…
A: The mathematical expression that shows the maximum amount of output by using different combinations…
Q: In a closed economy with no government, use the following information to compute the long run level…
A: The Solow Growth Model refers to the exogenous model of economic growth that analyzes Δ in the level…
Q: Japan and the United States are major trading partners and the exchange rate between the Japanese…
A: "Since you have asked a question with multiple sub-parts, we will solve the first three sub-parts…
Q: Consider an economy described by the following data (in $ trillion): Č- 3.25; I- 1.3; G= 3.5: T-3.0;…
A: Dear student as you have posted multiple sub-parts in a question but according to our policies and…
Q: The graph depicts the current capital market. Move one or both curves to show how the market will…
A: One of the components of economic growth is investment demand. It has to do with whether or not…
Q: Consider the following is the economy of Country Z: C = 200 + 0.85Y…
A: C=200+0.85YI=100 Find: a) The equilibrium level of output algebraically using the saving-investment…
Q: QUESTION 30 If the production function is given by Y=ĀK,1/3[2/3. the saving rate, S, is 20 percent;…
A:
Q: Japan and the United States are major trading partners and the exchange rate between the Japanese…
A: Loanable funds market is a financial market where Supply of loanable funds is being Done by…
7
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
- 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…1. Assume that the economy is in a steady state and there is an unexpected permanent increase in the rate of depreciation δ. Using the appropriate diagram show: a. What is the best response to this change? b. Does consumption initially increase or decrease?Consider an economy called Xanadu for which desired aggregate consumptiondepends on income, Y. and the real interest rate, r, according toCd =100+0.7Y - 200r.Xanadu's GDP is Y = 1000 and government spending on goods and services is G=180. Xanadu's desired future capital stock is given byK* = 140 - 100ucwhere luCdenotes the user-cost of capital. The price of capital is PK =2, thephysical depreciation rate is d =0.1 and the existing capital stock is K0= 50. Trapital stock between any period t and the following period t+1 evolves accordng toKt+1 = It+(1-d)Kt where It the level of investment. Assume throughout that net factor payments from abroad (NFP) is equal to zero.Suppose instead that Xanadu is a small open economy facing a world interest rate of 1%. It follows that Xanadu's current account position is equal toA) -16B) -51C) -6D) -8
- Assume that a national restaurant chain called BBQ builds 20 new restaurants at a cost of $1 million per restaurant. It outfits each restaurant with an additional $400,000 of equipment and furnishings. To help partially defray the cost of this expansion, BBQ issues and sells 400,000 shares of stock at $40 per share. a. What is the amount of economic investment that has resulted from BBQ’s actions? $_________ million b. How much purely financial investment took place? $__________ millionSuppose that conditions in the economy are such that the after-tax expected real interest rate is described by the equationRa = a X gWhere a is a number that depends on how people value their consumption in one period compared with another period, and g is the growth rate of the economy. The a equals 1 when people prefer consumption to be balanced, with the same amount of consumption each period; a may be bigger than the one when people prefer consumption today over consumption in the future, with a being larger and larger the more impatient people are:A - Suppose that a = 2, g = 0.02, the inflation rate is expected to be steady at pi = 0.03, and the tax rate is .40. What are the values of the equilibrium nominal interest rate and the before-tax expected real interest rate?B - Beginning with the situation in part a, if the growth rate of the economy increases to .04, what are the new values of the equilibrium nominal interest rate and the before-tax expected real interest rate?C -…Suppose that conditions in the economy are such that the after-tax expected real interest rate is described by the equationRa = a X gWhere a is a number that depends on how people value their consumption in one period compared with another period, and g is the growth rate of the economy. The a equals 1 when people prefer consumption to be balanced, with the same amount of consumption each period; a may be bigger than the one when people prefer consumption today over consumption in the future, with a being larger and larger the more impatient people are:D - Beginning with the situation in part a, if the expected inflation rate declings to 0.01, what are the new values of the equilibrium nominal interest rate and the before tax expected real interest rate?E - From these results, what general conclusions can you draw about the relationship between the nominal interest rate and the rate of economic growth, the tax rate, and the inflation rate? what about the relationship between the before…
- a. List all the equilibrium conditions of this model and Using the equilibrium conditions listed, write down an expression that describes the evolution of the aggregate capital stock, Kt over time. Briefly explain why this expression is not particularly convenient for our analysis of the model? b.Using your answer to the above question, derive the equation that describes the evo- lution of the the capital stock per effective unit of worker, kt. ' Why is the analysis in terms of the variables per effective unit of worker more useful than the one with the aggregate capital stock? c. Assume that a E (0, 1). Draw a diagram that describes the evolution of kt, and show that there exists a unique steady state, k* > 0. Label properly. Find the expressions for the steady state variables k*, y*, and c* in terms of the parameters of the model. , Now, assume that α = 1. Draw a diagram that describes the evolution of kt, and show that income per worker can grow indefinitely in this case. Label…1. Suppose an economy is currently in the steady state. Show in clear and well labelled labelled graph(s), the impact of (1) an increase in savings and (2) a decrease in the depreciation rate. What is the ultimate impact of these changes?Economists from Funlandia have collected the following information about the economy (all measured in billions of bucks): Y = 12, C= 9, T = 2, and G = 2.5. The economists also estimate the investment function is I = 2 – 0.5r where r is the country’s real interest rate expressed as a percentage. Calculate private saving, public saving, national saving, investment, and the real interest rate.
- Scenario 2Suppose the marginal product of capital is MPK=2-0.001K, the capital stock depreciates at 20% rate, the tax rate on revenues is 20% and price of capital is assumned to be 1. Furthermore, the economy has full-employment level of output of 5000, government purchases are 1000. Desired consumption is given by C^d=3000-2000r+0.1Y, where Y is output and r is expected real interest rate. Initial level of capital is 1000.Refer to Scenario 2. what is the expression for desired gross investment ? A) I^d=950-1250r B)I^d=950+1250r C)I^d=1750-1250r D)I^d=1950-1250r.Scenario 2Suppose the marginal product of capital is MPK=2-0.001K, the capital stock depreciates at 20% rate, the tax rate on revenues is 20% and price of capital is assumned to be 1. Furthermore, the economy has full-employment level of output of 5000, government purchases are 1000. Desired consumption is given by C^d=3000-2000r+0.1Y, where Y is output and r is expected real interest rate. Initial level of capital is 1000. Refer to Scenario 2. What is goods market clearing real interest rate? A)r=13.84 B)r=15% C)r=2% D)r=16%Hello I need help to find the answer for my econ 101 hw for a question as follows: Assume that the production function for a country is given by ?=√K and annual investment is given by the function ?=?×? where γ=0.270, and that the yearly depreciation rate is 4.50%. Suppose that this year, the output in the country is 1, and a neighbor country's output is 50% higher. Calculate the time it would take for the country's output to catch up with its neighbor's output. Assume the neighbor country's economy is neither growing nor shrinking. I will be also attaching the original problem for your reference as I just need to find the time that it would take the country's output to catch up with its neighbor's output. Thank You and please refer to the image to further assist with the question that I want answered.