EBK MACROECONOMICS
6th Edition
ISBN: 8220103116688
Author: O'Brien
Publisher: PEARSON
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Chapter 11, Problem 11.2.1RQ
To determine
The effect of change in production function per hour worked due to change in capital labor per hour worked and change in technology.
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Consider a small world that consists of two different countries, a developed and a developing country. In both countries, assume that the production function takes the following form: Y = F (K, LE) = K¹/4 (LE) 3/4, where Y is output, K is capital stock, L is total employment and E is labour augmenting technology. (a) Does this production function exhibit constant returns to scale in K and L? Explain. (b) Express the above production function in its intensive form (i.e., output per-effective worker y as a function of capital per effective worker k). (c) Solve for the steady-state value of y as a function of saving rate s, population growth rate n, technological progress g, and capital depreciation rate 6. (d) The developed country has a savings rate of 30% and a population growth rate of 2% per year. Meanwhile, the developing country has a savings rate of 15% and population growth rate of 5% a year. Technology evolves at the rate of 8% and 2% in…
Chapter 11 Solutions
EBK MACROECONOMICS
Ch. 11 - Prob. 11.1.1RQCh. 11 - Prob. 11.1.2RQCh. 11 - Prob. 11.1.3PACh. 11 - Prob. 11.1.4PACh. 11 - Prob. 11.1.5PACh. 11 - Prob. 11.1.6PACh. 11 - Prob. 11.1.7PACh. 11 - Prob. 11.1.8PACh. 11 - Prob. 11.2.1RQCh. 11 - Prob. 11.2.2RQ
Ch. 11 - Prob. 11.2.3RQCh. 11 - Prob. 11.2.4RQCh. 11 - Prob. 11.2.5RQCh. 11 - Prob. 11.2.6PACh. 11 - Prob. 11.2.7PACh. 11 - Prob. 11.2.8PACh. 11 - Prob. 11.2.9PACh. 11 - Prob. 11.2.10PACh. 11 - Prob. 11.2.11PACh. 11 - Prob. 11.2.12PACh. 11 - Prob. 11.3.1RQCh. 11 - Prob. 11.3.2RQCh. 11 - Prob. 11.3.3PACh. 11 - Prob. 11.3.4PACh. 11 - Prob. 11.3.5PACh. 11 - Prob. 11.3.6PACh. 11 - Prob. 11.4.1RQCh. 11 - Prob. 11.4.2RQCh. 11 - Prob. 11.4.3RQCh. 11 - Prob. 11.4.4PACh. 11 - Prob. 11.4.5PACh. 11 - Prob. 11.4.6PACh. 11 - Prob. 11.4.7PACh. 11 - Prob. 11.4.8PACh. 11 - Prob. 11.4.9PACh. 11 - Prob. 11.4.10PACh. 11 - Prob. 11.4.11PACh. 11 - Prob. 11.4.12PACh. 11 - Prob. 11.5.1RQCh. 11 - Prob. 11.5.2RQCh. 11 - Prob. 11.5.3PACh. 11 - Prob. 11.5.4PACh. 11 - Prob. 11.5.5PACh. 11 - Prob. 11.5.6PACh. 11 - Prob. 11.5.7PACh. 11 - Prob. 11.5.8PACh. 11 - Prob. 11.1RDECh. 11 - Prob. 11.2RDECh. 11 - Prob. 11.3RDE
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Similar questions
- Consider the per-worker production function graph. If there is an increase in capital per hour worked, holding technology constant, then A. there is a movement from A to B. B. there is a movement from A to C. C. there is a movement from B to D. D. there is a movement from D to C. If there is an increase in technology, holding constant the quantity of capital per hour worked, then A. there is a movement from C to D. B. there is a movement from A to B. C. there is a movement from D to B. D. there is a movement from A to C. C Real GDP per hour worked (Y/L) 10- Y/L2 Y/L₁ Per-Worker Production Function C 3 B Per Worker Production Function 1 K/L₁ K/L₂ Capital per hour worked (K/L) 10arrow_forwardTyped plaza Asaparrow_forwardDiscuss the following statement: “Those who argue that technological progress does not reduce employment should take a look at agriculture. At the start of the last century, there were more than 11 million farm workers. Today, there are fewer than 1 million. If all sectors start having the productivity growth that took place in agriculture during the 20th century, no one will be employed a century from now.”arrow_forward
- If capital per worker decreases, real GDP per hour of labour Answers: increases because the level of technology increases. decreases because the level of technology decreases. increases for a given level of technology. decreases for a given level of technology. none of the abovearrow_forwardWhat’s the formal name for the A_bar parameter in the production model we study? A. Average GDP B. Total factor productivity C. Per capita GDP D. Per capita capitalarrow_forwardIn the long run, the growth rate of output per worker is determined by the: the saving rate only the growth rate of technology and the growth rate of population the growth rate of technology, the growth rate of population and the saving rate the growth rate of population only the growth rate of technology onlyarrow_forward
- ı need only c and d optionarrow_forwardProductivity and growth policies Consider a hypothetical small island nation in which the only industry is cloud computing. The following table displays information about the economy over a two year period. Complete the table by calculating physical capital per worker as well as labor productivity. Hint: Recall that productivity is defined as the amount of goods and services a worker can produce per hour. In this problem, measure productivity as the quantity of goods per hour of labor. Year 2039 2040 Physical Capital (Servers) 200 480 Labor Force (Workers) Based on your calculations, productivity from 2039 to 2040. 100 120 Physical Capital per Worker (Servers) Labor Hours (Hours) 4,500 4,200 in physical capital per worker from 2039 to 2040 is asociated with Suppose you're in charge of establishing economic policy for this small island country. Output (TB of data storage) 40,500 75,600 Imposing restrictions on foreign ownership of domestic capital Subsidizing research and development…arrow_forwardGive typing answer with explanation and conclusion The production function is given by Y=AK, where K is the capital stock and A denotes the level of technology and equals 1.2 (the rate of technological progress equals 0). The rate of population growth is 2% and people save 15% of their incomes. The capital stock is 12000 and consumption of fixed capital is equal to 120 (and it always represents this percentage of the capital stock). Calculate the rate of growth of output per worker.arrow_forward
- Based on article "Technology and economic growth: From Robert Solow to Paul Romer" by Rui Zhao, Solow mentioned technology (At) and capital per unit of effective labor (Kt) have a significant influence on a country's ability to “catch-up” or “converge” to a steady-state level (K*). Why did Solow model assume At as a black box in economics? Explain in brief.arrow_forwardFor a given level of technology, the level of labor productivity would increase in all of the following situations except when: A. there is an increase in natural resources per worker B. there is an increase in human capital per worker C. there is an increase in physical capital per worker D. there is an increase in laborarrow_forwardDo not use chatgpt.arrow_forward
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