Macroeconomics (Fourth Edition)
4th Edition
ISBN: 9780393603767
Author: Charles I. Jones
Publisher: W. W. Norton & Company
expand_more
expand_more
format_list_bulleted
Question
Chapter 17, Problem 6E
(a)
To determine
The result of an increase in the total factor productivity and investment on the desired capital stock.
(b)
To determine
The effect of an uptick in the total factor productivity and investment.
(c)
To determine
The effect of an improvement in the total factor productivity on investment in the long run.
Expert Solution & Answer
Want to see the full answer?
Check out a sample textbook solutionStudents have asked these similar questions
Looking at business fixed investment, elaborate on why investment is negatively related to theinterest rates.b. Using the Tobin’s q theory, elaborate on the relationship between investment and capitalstock?c. If the market value of firm A is $1.5 million and the replacement cost of capital is $450,000, find the Tobin's q.d. Should the firm replace capital? Elaborate on your response.
1 – The equation for the change in the capital stock (per worker) is given by the following: (Kt+1/N) - (Kt/N) = s(Yt/N) - δ(Kt/N). Explain what condition(s) must occur for each of the following to happen:
i) the capital stock to increase
ii) the capital stock to decrease
iii) the capital stock to remain constant
The Bureau of economic analysis announced today that gross domestic product, the widest measure economic activity, grew in a meager 0.9% annualized rate in the third quarter compared to the first six months of 2018 the US economy in the first 3 quarters of 2019 grew just 1.6%, a pronounced slow down relative to the 3.9% growth in the second half of 2018. Some of this slowdown can be explained by a negative contribution from inventory investment, which contracted 0.9% in the third quarter. There’s plenty to worry about in this report, as it showed us Retail sales Fell for the first time in seven months in September, although overall consumer spending which comprises about 66% of the US GDP activity was up 0 .4%. Capacity utilization also decreased 0.4% in the third quarter to 74.5%.1. Write a phrase from the article that speaks to change in household consumption in the third quarter in 2019.
2. From the information in this article, did household consumption increase or decrease in the…
Chapter 17 Solutions
Macroeconomics (Fourth Edition)
Knowledge Booster
Similar questions
- Explain how Life-Cycle Hypothesis and the Permanent Income Hypothesis, explain the difference between long run APC and short run APC.arrow_forwardLong run real interest rates are expected to increase. How will an accountant and economist view the effect of the increase. Does the difference in the viewpoints matter?arrow_forwardThe production function is Cobb-Douglas: Y = AK^αL^1−α, where K = 1000, and L = 100. α=0,365 A=2,3 a) How much output does the economy produce?b) What is the real wage rate equal to in equilibrium? c) What is the real rental rate of capital equal to in equilibrium?arrow_forward
- Explain the short-run and long-run effects of an exogenous decrease in investment by explanation and using graphical analysis.arrow_forwardDefine the term fixed asset?arrow_forwardQuestion :The investment function would shift to the left by: a- any event that raisesthe purchase price of capital b- any event that raises the marginal product of capital c- an natural disaster that destroys a major part of capital stock while leaving the labour supply intact d- a technological innovation e- any event that raises the marginal product of labourarrow_forward
- Consider the market for loanable funds. Suppose the demand for loans is given be i=9-Q+π, and the supply of loans is given by i=Q/2+π, where π represents inflation. In the case of π=3, what is the real interest "r" rate given the equilibrium values found in the last question? r=0 r=3 r=6 r=-3arrow_forwardNeed only answer not explain Q.The marginal product of labor (MPL) is given by the ________. labor share of income - average output per unit of labor Q. .In the IS curve, if Y falls for any given level of the real interest rate ________. saving increases output increases consumption decreases all of the above none of the above labor share of income + average output per unit of labor labor share of income × average output per unit of labor labor share of income ÷ average output per unit of labor none of the abovearrow_forwardInvestment is driven by all of the following except ____________.arrow_forward
- Output in Winston-Salem is produced using labor, L, and capital, K. Initially there is a fixed amount of capital, K0, and a fixed amount of money. All residents of Hickory only uses this form of money for all their transactions. A large thunderstorm floods Winston-Salem. The flood destroys 20 percent of all capital but does not injure or kill anyone. What happens to real wages and output, respectively? Increase, decrease none of the answers are correct Decrease, unchanged Increase, uncertain Increase, increasearrow_forwardIf RGDP as measured by the Product Market is shown to be $14T, explain what you would expect RGDP as measured by the Factor Market to be, and why?arrow_forwardThe national saving schedule (S) is usually drawn with a positive slope because: a. the value of the marginal product of capital is high when the real interest rate is high b. the demand for investment schedule shifts to the right when the real interest rate increases c. the private sector has a greater incentive to save when the real interest rate is high d. firm’s demand for investment is high when the real interest rate is higharrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
- Microeconomics: Private and Public Choice (MindTa...EconomicsISBN:9781305506893Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningEconomics: Private and Public Choice (MindTap Cou...EconomicsISBN:9781305506725Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. MacphersonPublisher:Cengage LearningEconomics (MindTap Course List)EconomicsISBN:9781337617383Author:Roger A. ArnoldPublisher:Cengage Learning
Microeconomics: Private and Public Choice (MindTa...
Economics
ISBN:9781305506893
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics: Private and Public Choice (MindTap Cou...
Economics
ISBN:9781305506725
Author:James D. Gwartney, Richard L. Stroup, Russell S. Sobel, David A. Macpherson
Publisher:Cengage Learning
Economics (MindTap Course List)
Economics
ISBN:9781337617383
Author:Roger A. Arnold
Publisher:Cengage Learning