Macroeconomics
10th Edition
ISBN: 9781319105990
Author: Mankiw, N. Gregory.
Publisher: Worth Publishers,
expand_more
expand_more
format_list_bulleted
Question
Chapter 8, Problem 4PA
To determine
The saving rate and the standard of living.
Expert Solution & Answer
Trending nowThis is a popular solution!
Students have asked these similar questions
3). Let's consider the Solow Model without technology advancement.
Y(t)=2K(t)^(1/2)*L(t)^(1/2)
The population growth rate=0.02
Capital accumulation is s*Y(t)-d*K
s=0.2, d=0.03
d is the capital depreciation rate. In the steady state, please calculate the following
measurements.
(a)Capital per capita
A. 16
В. 24
С. 36
D. 48
Е. 64
F.
None of the above
(b)Marginal product of capital (Hint: The first derivative of Y with respect to K)
А. 1
В. 1/2
С. 1/4
D. 1/8
E. 1/16
F. None of the above
Consider the country of Solow, which is described by the Solow–Swan growth model with constanttotal factor productivity. Let the saving rate θ = 0.75. Per capita output (y) is equal to 100 and the percapita capital stock (k) is 1000. For Solow to be in steady state:
a.the depreciation rate is 0.025 and the population growth rate is 0.05
b.the depreciation rate is 0.25 and the population growth rate is 0.5
c.the sum of the depreciation rate and the population growth rate must be less than 0.075
d.the depreciation rate and population growth rate must sum to 0.75
1
Knowledge Booster
Similar questions
- This question is about the Solow-Swan growth model.arrow_forward3). Let's consider the Solow Model without technology advancement. Y(t)=2K(t)^(1/2)*L(t)^(1/2) The population growth rate=0.02 Capital accumulation is s*Y(t)-d*K_ s=0.2, d=0.03 d is the capital depreciation rate. In the steady state, please calculate the following measurements. (b)Marginal product of capital (Hint: The first derivative of Y with respect to K) А. 1 В. 1/2 С. 1/4 D. 1/8 E. 1/16 F. None of the abovearrow_forwardQuestion 27 Consider countries A and B, with A having a higher population growth rate than B. According to the Solow-Swan model, output per person in A and output per person in B are the same in steady state. Answer True or False. Remember to include your explanation.arrow_forward
- A country is described by the Solow model, with a production function of y = k¹/2. Suppose that k is equal to 900. The fraction of output invested in 50%. The depreciation rate is 10%. Is the country at its steady-state level of output per worker, above the steady state, or below the steady state? Show how you reached your conclusion.arrow_forwardan economy is described by the Solow-Swan model with the following variables, E(t)=1 The saving rate is 0.41 per year. Labor's share of income is 0.44. The growth rate of labor efficiency is 0.03 per year. The growth rate of the labor force is 0.02 per year Depreciation is 0.09 per year. calculate the steady-state value of the capital-to-labor ratio, K/L Enter your answer to two places after the decimal.arrow_forwardConsider a country that is initially in steady state. Suppose the saving rate increases. Moreover, the population growth rate increases by 1% but the capital depreciation rate falls by 1%. According to the Solow–Swan model, the per capita capital stock increases, and the country moves to a new, highersteady state level of per capita income.Answer true, false, or uncertain. Please briefly explain your answerarrow_forward
- Consider the Solow-Swan model. Along a balanced growth path, the capital/output ratio is constant. True/False. Remember to include your explanation.arrow_forwardUsing the Solow model diagram, illustrate what happens to the steady-state capital per worker and output per worker and output per worker when a country faces a positive technology stock.arrow_forwardUse the Solow model below to answer the question. Y Y3 Y₂ Y₁ K₁₁ K₂ K3 Y = Af(K,H) dk SY K Suppose that Y₁ is 1,475, Y₂ is 6,184, and Y3 is 10,992. The savings rate for this economy is 30% and the depreciation rate is 8.2%. If this economy is currently at a GDP of 1,475, what is the smallest amount of foreign aid which would move the economy up to a GDP of 10,992? Assume that all foreign aid becomes investment. Round your final answer to two decimal places.arrow_forward
- Countries A and B have the same rates of invest- ment, population growth, and depreciation. They also have the same levels of income per capita. Country A has a higher rate of growth than does Country B. According to the Solow model, which country has higher investment in human capital? Explain your answer.arrow_forwardConsider two countries (A and B) identical in everything except that country A has higher capital. According to the Solow model, which of these statements is true? A Country A will grow as fast as country B and will end up with a higher equilibrium capitalK* B. Country A will grow faster than country B and will end up with the same equilibrium capital K C. Country A will grow as fast as country B and will end up with a lower equilibrium capital K* D. Country A will grow slower than country B and will end up with the same equilibrium capital K* cheik piearrow_forwardConsider the Solow model with no technological progress. Assume that depreciation equals 0.20, population growth is 0.10, and that the capital-output ratio K/Y equals 0.7. Finally, assume that the savings rate is 30% (i.e. s-0.3). Then, the economy's steady state capital per worker is exactly at the Golden Rule level it is impossible to know whether the economy is at the Golden Rule level without more information the economy's steady state capital per worker is below the Golden Rule level the economy's steady state capital per worker is above the Golden Rule levelarrow_forward
arrow_back_ios
SEE MORE QUESTIONS
arrow_forward_ios
Recommended textbooks for you
Principles of Economics (12th Edition)EconomicsISBN:9780134078779Author:Karl E. Case, Ray C. Fair, Sharon E. OsterPublisher:PEARSON
Engineering Economy (17th Edition)EconomicsISBN:9780134870069Author:William G. Sullivan, Elin M. Wicks, C. Patrick KoellingPublisher:PEARSON
Principles of Economics (MindTap Course List)EconomicsISBN:9781305585126Author:N. Gregory MankiwPublisher:Cengage Learning
Managerial Economics: A Problem Solving ApproachEconomicsISBN:9781337106665Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike ShorPublisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...EconomicsISBN:9781259290619Author:Michael Baye, Jeff PrincePublisher:McGraw-Hill Education
Principles of Economics (12th Edition)
Economics
ISBN:9780134078779
Author:Karl E. Case, Ray C. Fair, Sharon E. Oster
Publisher:PEARSON
Engineering Economy (17th Edition)
Economics
ISBN:9780134870069
Author:William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher:PEARSON
Principles of Economics (MindTap Course List)
Economics
ISBN:9781305585126
Author:N. Gregory Mankiw
Publisher:Cengage Learning
Managerial Economics: A Problem Solving Approach
Economics
ISBN:9781337106665
Author:Luke M. Froeb, Brian T. McCann, Michael R. Ward, Mike Shor
Publisher:Cengage Learning
Managerial Economics & Business Strategy (Mcgraw-...
Economics
ISBN:9781259290619
Author:Michael Baye, Jeff Prince
Publisher:McGraw-Hill Education