Homework Answers
Answer
1)
The correct answer is (a) Advancement in Technology
Advancement in Technology results in increase in labor productivity i.e. With given unit of Capital now we can produce more output with the Labor and hence shifts production function from Y1 to Y2. As Production increases Investment which equals sY will also shifts upwards.
Hence, the correct answer is (a) Advancement in Technology
2)
The correct answer is (c) Population, incentive and ideas
More the population greater will be the market size , hence greater will be the incentive to innovate and hence this will increase the speed of technological growth in the future. Also In order to innovate the most important factor is the ideas. Higher the thinking, more will be the ideas and hence there will be increase in technological growth and hence this will increase the speed of technological growth in the future
Hence, The correct answer is (a) Population, incentive and ideas
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Output (Y) Consider the graph. Suppose the production function and investment curves shift from Y1 to...
1. Let the production function for an economy by given by Y=AK1/2L1/2 where Y is output,...
1. Let the production function for an economy by given by Y=AK1/2L1/2 where Y is output, K is capital, L is labor and A is “ideas.” a. If L=25, A=10, the savings rate is ¼ and the depreciation rate is ½, what will the steady-state values of output, capital and consumption be? b. On a graph, show what will happen to steady-state output and capital of there is a decrease in the depreciation rate. 2. As capital increases, the marginal...
Need help with these questions. With explanations if possible! 1. Let the production function for an...
Need help with these questions. With explanations if possible! 1. Let the production function for an economy by given by Y=AK1/2L1/2 where Y is output, K is capital, L is labor and A is “ideas.” a. If L=25, A=10, the savings rate is ¼ and the depreciation rate is ½, what will the steady-state values of output, capital and consumption be? b. On a graph, show what will happen to steady-state output and capital of there is a decrease in...
4. Which of the following will cause an increase in output per worker in the long...
4. Which of the following will cause an increase in output per worker in the long run? A. an increase in the saving rate ( B. a reduction in the depreciation rate C. an increase in the stock of human capital D. an improvement of technology 5. Suppose, due to a military conflict, that a country experiences a large reduction in its capital stock. Assume no other effects of this event on the economy. Which of the following will tend...
Suppose a decrease in aggregate demand shifts the economy from equilibrium to P4 and Y1. LRAS...
Suppose a decrease in aggregate demand shifts the economy from equilibrium to P4 and Y1. LRAS Price Level AD Y Y* Real GDP a. Which of the following events would likely cause the decrease in aggregate demand? Personal consumption falls as workers become concerned about future employment prospects. Gross Investment Increases as capital units become fully utilized. Imports decrease due to Increased foreign prices b. A decrease in aggregate demand is of policy concern due to the increase in the...
The change of inputs and production function determine the level of output in the long run....
The change of inputs and production function determine the level of output in the long run. Suppose an economy described by the Solow model utilize capital and labour in production process which technology parameter ofa=1/2. Assuming that population has zero growth rate and technology is constant (A=1): a. Write down production function for this country, determine output per worker as function of capital per worker and explain the steady state of capital condition (6 POINTS) b. If 8 and s...
Suppose a decrease in aggregate demand shifts the economy from equilibrium to P, and Y. Price Level ................
Suppose a decrease in aggregate demand shifts the economy from equilibrium to P, and Y. Price Level ............. Y, Y Real GDP a. Which of the following events would likely chuse the decrease in aggregate demand? Personal consumption falls as workers become concerned about future employment prospects Gross investment increases as capital units become fully utilized. Imports decrease due to increased foreign prices. a. Which of the following events would likely cause the decrease in aggregate demand? Personal consumption falls...
QUESTION 1 Price level AS P1 P2 AD1 AD2 Y2 Y1 Real national output Which of...
QUESTION 1 Price level AS P1 P2 AD1 AD2 Y2 Y1 Real national output Which of the following would cause the shift in the AD curve (from ADto AD2) shown in the diagram above? A. The government increases interest rates B. The rate if income tax is reduced CA depreciation of the US dollar An improvement in technology QUESTION 2 Which combination of fiscal policies would be the most expansionary? A. an increase in government spending and an increase in...
2. Consider an economy which has the production function Y = AK03L07 The growth rate of...
2. Consider an economy which has the production function Y = AK03L07 The growth rate of the population is 0.01, the growth rate of productivity is 0.02, the capital depreciation rate is 0.06, and the saving rate is 0.24. In 2019, capital is 1500.0, labor is 10.0, and productivity is 15.0. In a yearly Solow growth model that allows for population and productivity growth), (a) What is the growth rate of output in the long run? (b) What is the...
20. If a country's depreciation rate increased from 2 percent to 5 percent of physical capital and it was operating...
20. If a country's depreciation rate increased from 2 percent to 5 percent of physical capital and it was operating at its steady-state before the change, we would expect to see which of the following? I. a decrease in the steady-state per capita capital stock II. a decrease in the steady-state level of real GDP per capita III. a corresponding decrease in real population growth rate IV. an increase in capital stock A) All the above are correct. B) I,...
factors that shift the AD Curve include A) government purchases B) autonomous investment C) taxes D)...
factors that shift the AD Curve include A) government purchases B) autonomous investment C) taxes D) all of the above E) none of the above 33. If government cuts taxes A) after tax income should increase shifting AD to the left to a lower cu B) after tax income should increase shifting AD to the right to a higher eq output C) after tax income and the equilibrium level of output remain unchanged D) after tax income remains unchanged but...
4. Which of the following will cause an increase in output per worker in the long run? A. an increase in the saving rate ( B. a reduction in the depreciation rate C. an increase in the stock of human capital D. an improvement of technology 5. Suppose, due to a military conflict, that a country experiences a large reduction in its capital stock. Assume no other effects of this event on the economy. Which of the following will tend...
Suppose a decrease in aggregate demand shifts the economy from equilibrium to P4 and Y1. LRAS Price Level AD Y Y* Real GDP a. Which of the following events would likely cause the decrease in aggregate demand? Personal consumption falls as workers become concerned about future employment prospects. Gross Investment Increases as capital units become fully utilized. Imports decrease due to Increased foreign prices b. A decrease in aggregate demand is of policy concern due to the increase in the...
The change of inputs and production function determine the level of output in the long run. Suppose an economy described by the Solow model utilize capital and labour in production process which technology parameter ofa=1/2. Assuming that population has zero growth rate and technology is constant (A=1): a. Write down production function for this country, determine output per worker as function of capital per worker and explain the steady state of capital condition (6 POINTS) b. If 8 and s...
Suppose a decrease in aggregate demand shifts the economy from equilibrium to P, and Y. Price Level ............. Y, Y Real GDP a. Which of the following events would likely chuse the decrease in aggregate demand? Personal consumption falls as workers become concerned about future employment prospects Gross investment increases as capital units become fully utilized. Imports decrease due to increased foreign prices. a. Which of the following events would likely cause the decrease in aggregate demand? Personal consumption falls...
QUESTION 1 Price level AS P1 P2 AD1 AD2 Y2 Y1 Real national output Which of the following would cause the shift in the AD curve (from ADto AD2) shown in the diagram above? A. The government increases interest rates B. The rate if income tax is reduced CA depreciation of the US dollar An improvement in technology QUESTION 2 Which combination of fiscal policies would be the most expansionary? A. an increase in government spending and an increase in...
2. Consider an economy which has the production function Y = AK03L07 The growth rate of the population is 0.01, the growth rate of productivity is 0.02, the capital depreciation rate is 0.06, and the saving rate is 0.24. In 2019, capital is 1500.0, labor is 10.0, and productivity is 15.0. In a yearly Solow growth model that allows for population and productivity growth), (a) What is the growth rate of output in the long run? (b) What is the...
factors that shift the AD Curve include A) government purchases B) autonomous investment C) taxes D) all of the above E) none of the above 33. If government cuts taxes A) after tax income should increase shifting AD to the left to a lower cu B) after tax income should increase shifting AD to the right to a higher eq output C) after tax income and the equilibrium level of output remain unchanged D) after tax income remains unchanged but...
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