Yes, the above equation contradicts the statement that GDP fluctuates over time. This is because this equation considers Capital and labor to be constant and fixed level of capital and labor will keep the level of GDP constant. This is against the statement that GDP fluctuates because labor is considered variable in short run and both capital and labor are considered variable in the long run.
Homework 2 Question 3. Consider the equation Y-F(K, L). Does this equation contradict that GDP fluctuates...
Consider the production function given by y = f(L,K) = L^(1/2) K^(1/3) , where y is the output, L is the labour input, and K is the capital input. (a) Does this exhibit constant, increasing, or decreasing returns to scale? (b) Suppose that the firm employs 9 units of capital, and in the short-run, it cannot change this amount. Then what is the short-run production function? (c) Determine whether the short-run production function exhibits diminishing marginal product of labour. (d)...
1.The aggregate production function is Y = F(K, L) where Y = real GDP, K = capital and L = labor. For Y = F(K, L) = K1/3Lb where b = 0 there are A.decreasing returns to scale B.increasing returns to scale C.constant returns to scale D.none of the other answers is correct. E. we cannot determine the returns to scale 2.If y = f(x) = ln U(x) then dy/dx = f’(x) = a. none of the other answers is...
Consider the neoclassical closed economy model: Y=COY-T)+1(t) + G Y=F(K.L) M/P L(r+z* Y) CY-T) is describing consumptions as a function of disposable income, Kand L are fixed and do not change over time, G and T are chosen by government. And are exogenous and fixed. 1- Suppose K 150, L=500 Y-2.5 K"L- C 12+0.7(Y-T) 250 G 250, T I60-400r P 1 a 0.3 a) Calculate GDP value: I Derive the equations for marginal product of labor & marginal product of...
15a) Consider the IVP y f(x.y), axb, y(a) k By integrating the differential equation, using suitable interpolation points, obtain the two step Adams- Bashforth method, yo k; yn+1 yn+h/2 [3fxn,ya) -f(xa-l,ya-1] b) Estimate the error in part (a)
2. (A simulated economy) Let Y,-F(K,,Lt)-AK) L. The discrete time version of the capital accumulation equation is given by Lo-1 and labor grows at a rate of n-0.01. A-1, Ko-0.01 and 6-0.07 a) Assume that s-0.2. Find the level of consumption in the economy in periods 1,2,3,4 and 100. b) Repeat the computations in (a) assuing s 03 consumption over time after s increases to s = 0.33 d) Do the sanne as in part (c) but assuming that s...
2. (A simulated economy) Let Y,-F(K,,Lt)-AK) L. The discrete time version of the capital accumulation equation is given by Lo-1 and labor grows at a rate of n-0.01. A-1, Ko-0.01 and 6-0.07 a) Assume that s-0.2. Find the level of consumption in the economy in periods 1,2,3,4 and 100. b) Repeat the computations in (a) assuing s 03 consumption over time after s increases to s = 0.33 d) Do the sanne as in part (c) but assuming that s...
Consider the Mundel-Fleming small open economy model: Y=C(Y-T)+1(1) + G Y = F(K,L) (M/P) L(r+z® Y) Goods Money C = 50+0.8(Y- T) M 3000 I = 200-20r r*=5 NX = 200-508 P = 3 G=T= 150 L(Y, r) Y - 30r 1- find the IS* equation (hint : y as a function of e) 2- find the LM* equation (hint, also relates y and maybe e) 3-draw the IS-LM curve I y 4- find the equilibrium interest rate (trick question!)...
5. (25 points) Consider an economy described by the production function: Y - F(K, L) K//3, and the depreciation rate is 3 percent. a. Please find the Golden Rule level of capital. b. What is the saving rate that is necessary to reach the Golden Rule level?
11. Consider the function f(x) = e-l=\. Where does f attain its absolute maximum on all of C? Why does this not contradict the maximum modulus principle?
(3) Consider the firm of the previous question (with f(L,K) = 2K√L and with w = 1 and r = 4). For the following questions suppose that this firm currently uses K = 4 machine hours, and that this can’t be changed in the short-run. f(L) = 8√L L = Q^2/64 C= 16 + Q^2/64 AC = 16/Q + Q/64 MC = Q/32 (e) In one graph draw the average cost and marginal cost curves. The graph should show the...