Macroeconomics (9th Edition)
9th Edition
ISBN: 9780134167398
Author: Andrew B. Abel, Ben Bernanke, Dean Croushore
Publisher: PEARSON
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Question
Chapter 8, Problem 3AP
a)
To determine
To find: The variable which is more volatile.
b)
To determine
To find: The relationship between procyclical behavior of average labor productivity and Okun’slaw.
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Students have asked these similar questions
The determinants of productivity
Consider a simple economy whose only industry is fishing. In this industry, productivity—the amount of goods and services a worker can produce per hour—is measured by the number of fish one fisherman catches per hour.
In the following table, match each example to the productivity determinant it represents.
Examples
Human Capital per Worker
Natural Resources per Worker
Physical Capital per Worker
Technological Knowledge
The fertile waters in which the fish feed and breed
An advanced mapping system that determines the likelihood of finding fish schools in different depths and locations
The skills workers develop through training before working on and piloting boats
The boats in the fishing fleet
The production function for an economy can be expressed as Y= F(K,L), where Y is real
GDP, K is the quantity of capital in the economy, and L is the quantity of labor in the
economy.
If Y = K0.5 L0.5, what is real GDP if the quantity of capital is 900 and the quantity of labor is
а.
400?
b. What is/are the endogenous variable(s) in this model?
What is/are the exogenous variable(s) in this model?
с.
Assume that digital revolution popularizes the
use of artificial intelligence (computers) in the
workplace. The production function becomes:
Y = 0.25 K(2/5)(ACN)(3/5)
where C stands for the number of
computers.:
a) Use growth accounting to predict the
increase in total output in response to an
increase in the number of computers by 10
percent.
b) The nominal interest rate on government
bonds equals 9 percent and inflation equals
percent. The rate of GDP growth is equal to
the result obtained in (a). Use the debt
dynamics equation and graph to explain
whether or not the level of public debt in
percent of GDP can be stabilized if the
government runs a primary deficit.
c) Use the neoclassical investment model
(equation and graphs) to assess the impact of
a decrease in the number of computers on
investment (in traditional physical capital K).
Knowledge Booster
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