which of the followings is NOT an assumption of the harrod -domar model? a-closed economy b-capital is the only factor of production c-variable marginal and average propensity to save d-fixed capital-output ratio
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which of the followings is NOT an assumption of the harrod -domar model?
a-closed economy
b-capital is the only factor of production
c-variable marginal and average propensity to save
d-fixed capital-output ratio
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- Q4. Consider the national - income model where goods can be produced locally or imported. Local consumers, investors and government in addition to foreign countries are the main customers to these goods. Further, government and external demands for goods and services are considered fixed. Investment and imports depend positively on income linearly and private consumption is also depending on private income. 1. Write the system . 2. Find the exogenous and endogenous variables in the above model. 3. Solve the modelConsider the following one-period model. Assume that the consumption good is produced by a linear technology: Y = zN D where Y is the output of the consumption good, z is the exogenous total factor productivity, N D is the labour hours. Government has to finance its expenditures, G, using a tax on the representative firm. The government collects t units of consumption goods from the firm for each unit of labor it employs (0 < t < 1). There is no other tax in the economy. The firm is owned by the representative consumer who is endowed with h hours of time she can allocate between work, NS and leisure, l. Preferences of the representative consumer are: U(c, l) = ln c + ln l (1) (a) Write down the definition of a competitive equilibrium for the above economy. (b) Show that the Walras’ law holds for this economy. (c) Solve for the leisure, l, the consumption, c, employment, N, wage rate, w, tax rate, τ , and output, Y in equilibrium. (d) Solve for the optimal allocation of leisure,…A closed economy which is shown below, endogenous variables are Y, I, C, i and exogenous variables are Go and Mo and parameters are a,b,t,d,e, k. Y= C+l+G C= a+ b(1-t)Y |= d-ei G= Go Md= Ms Ma= ky-li Ms=Mo Calculate the equlibrium level of I by using inverse matrix rule.
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- Why is Solow Model important for any Economy?In the circular flow model: a) income and expenditures are equal. b) investment comes from government tax policy. c) consumption expenditures fund investment. d) the value of income earned by the government is determined by the foreign sectorSEE MORE QUESTIONS
