Homework Answers
Solution:
For steady state to be at k1 level of capital, we must have investment and saving curve per worker to intersect at that level. We will understand this mathematically and graphically.
For inetament per worker curve, change in curve (or line here) must be such that it's line increases and it pivots. The slope would increase with increase in either of population growth (n) or depreciation rate (d). So we eliminate options B and C.
Another way to reach is change in saving per worker curve: we require that curve to tilt a bit downward such that it's intersection with investment line occurs at the required point. This downward tilt occurs with either decrease in savings rate or decrease in total factor productivity (such that entire s*f(k) falls).
Thus, correct option is (A) a reduction in the saving rate.
Add Answer to:
10. Consider the figure below that provides an illustration of the dynamics of the Solow model....
Problem 8: Consider the standard Solow model. The expression for output per worker and the dynamics...
Problem 8: Consider the standard Solow model. The expression for output per worker and the dynamics of capital per worker are given by the following expression: y = Ak" where δ > 0 is the depreciation rate of capital (a) Using a Solow diagram, what is the effect of an increase in productivity A on steady state capital? (label the axes and mark the initial and the final steady state level of capital) (b) Find an algebraic expression for the...
Here with the chp6 21 Question 5. (4 points each) Consider the Solow model in Chapter...
Here with the chp6 21
Question 5. (4 points each) Consider the Solow model in Chapter 6. Production function is given by 1 1 YA = A_KŽ NĚ The notations of variables are the same as the slides for Ch.6. The depreciation rate d is 0.1, the population growth rate n is 0.1, and the saving rate s is 0.2. The level of productivity is constant, so At = 2 all the time. (5) What is the Growth Accounting equation...
A hypothetical economy can be described by the Solow growth model. Answer the below questions for...
A hypothetical economy can be described by the Solow growth model. Answer the below questions for this economy by using the following information: ? = √? saving rate (s) = 0.20 depreciation rate (&) = 0.12 initial capital per worker (k) = 4 population growth rate (n) = 0.02 a. What is the steady-state level of capital per worker? b. What is the steady-state level of output per worker? c. What is the level of steady-state consumption per worker? d....
Consider the Solow growth model. Output at time t is given by the production function Y-AK3...
Consider the Solow growth model. Output at time t is given by the production function Y-AK3 Lš where K, is total capital at time t, L is the labour force and A is total factor productivity. The labour force and total factor productivity are constant over time and capital evolves according the transition equation KH = (1-d) * Kit It: where d is the depreciation rate. Every person saves share s of his income and, therefore, aggregate saving is St-s...
Consider the Solow growth model. The production function is given by Y = K αN1−α ,...
Consider the Solow growth model. The production function is given by Y = K αN1−α , with α = 1/3. Depreciation rate δ = 0.05, and saving rate s = 0.25. Labor force grows at the rate n = 0.01. (a) Write down the law of motion for capital per worker. (b) Compute steady state capital per worker. (c) Suppose the economy has initial capital per worker k0 = 4. Describe the dynamics of this economy, i.e., how does capital...
Consider the Solow growth model with depreciation rate and population growth rate n. The equation of...
Consider the Solow growth model with depreciation rate and population growth rate n. The equation of motion for the capital stock and the per worker production function in this economy are given by: Ak= s(f(k) - (8 + n) k y= f(k) = k1/4 a). Suppose adoption of modern birth control methods in a developing country causes the population growth rate to decrease. What happens in the main Solow diagram: what curve(s) shin, what happens to the steady- state level...
Consider the Solow growth model with the following production function where y is output. K is ca...
A and B only
Consider the Solow growth model with the following production function where y is output. K is capital, s is the productivity and is labor. Assume that 0 < α < 1 Further, suppose that labor grows at a constant rate n. That is. 1 + n. Also, assume that capital depreciates at rate d and that gross investment in capital is fraction s of output. a Letting k-N, obtain the law of motion for capital accumulation...
The economy of the United States can be described by the Solow growth model. The following...
The economy of the United States can be described by the Solow growth model. The following are some characteristics of the United States economy: Saving rate(s) 0.10 Depreciation rate (8) 0.012 Steady-state capital per worker (k) 4 Population growth rate (n) 0.04 Steady-state output per worker 100,000 a. What is the steady-state rate of growth of aggregate output in the United States? b. What is the rate of growth of output per worker in the United States in the steady-state?...
The economy of the United States can be described by the Solow growth model. The following...
The economy of the United States can be described by the Solow growth model. The following are some characteristics of the United States economy: Saving rate(s) 0.10 Depreciation rate (8) 0.012 Steady-state capital per worker (k) 4 Population growth rate (n) 0.04 Steady-state output per worker 100,000 a. What is the steady-state rate of growth of aggregate output in the United States? b. What is the rate of growth of output per worker in the United States in the steady-state?...
3. Transition Dynamics Consider the Solow growth model with constant population and no techno- logical progress...
3. Transition Dynamics Consider the Solow growth model with constant population and no techno- logical progress as studied in class. Suppose the economy is initially in the steady state, with the level of per-capita capital stock of kss. The per-capita production function is given by y -f (k) - Akt, 0 < α < 1. In each of the following scenarios, plot the transition time path of per capita capital stock. kt, per-capita output, yt, and per-capita consumption, ct- (1-s...
Problem 8: Consider the standard Solow model. The expression for output per worker and the dynamics of capital per worker are given by the following expression: y = Ak" where δ > 0 is the depreciation rate of capital (a) Using a Solow diagram, what is the effect of an increase in productivity A on steady state capital? (label the axes and mark the initial and the final steady state level of capital) (b) Find an algebraic expression for the...
Here with the chp6 21
Question 5. (4 points each) Consider the Solow model in Chapter 6. Production function is given by 1 1 YA = A_KŽ NĚ The notations of variables are the same as the slides for Ch.6. The depreciation rate d is 0.1, the population growth rate n is 0.1, and the saving rate s is 0.2. The level of productivity is constant, so At = 2 all the time. (5) What is the Growth Accounting equation...
Consider the Solow growth model. Output at time t is given by the production function Y-AK3 Lš where K, is total capital at time t, L is the labour force and A is total factor productivity. The labour force and total factor productivity are constant over time and capital evolves according the transition equation KH = (1-d) * Kit It: where d is the depreciation rate. Every person saves share s of his income and, therefore, aggregate saving is St-s...
Consider the Solow growth model with depreciation rate and population growth rate n. The equation of motion for the capital stock and the per worker production function in this economy are given by: Ak= s(f(k) - (8 + n) k y= f(k) = k1/4 a). Suppose adoption of modern birth control methods in a developing country causes the population growth rate to decrease. What happens in the main Solow diagram: what curve(s) shin, what happens to the steady- state level...
A and B only
Consider the Solow growth model with the following production function where y is output. K is capital, s is the productivity and is labor. Assume that 0 < α < 1 Further, suppose that labor grows at a constant rate n. That is. 1 + n. Also, assume that capital depreciates at rate d and that gross investment in capital is fraction s of output. a Letting k-N, obtain the law of motion for capital accumulation...
The economy of the United States can be described by the Solow growth model. The following are some characteristics of the United States economy: Saving rate(s) 0.10 Depreciation rate (8) 0.012 Steady-state capital per worker (k) 4 Population growth rate (n) 0.04 Steady-state output per worker 100,000 a. What is the steady-state rate of growth of aggregate output in the United States? b. What is the rate of growth of output per worker in the United States in the steady-state?...
The economy of the United States can be described by the Solow growth model. The following are some characteristics of the United States economy: Saving rate(s) 0.10 Depreciation rate (8) 0.012 Steady-state capital per worker (k) 4 Population growth rate (n) 0.04 Steady-state output per worker 100,000 a. What is the steady-state rate of growth of aggregate output in the United States? b. What is the rate of growth of output per worker in the United States in the steady-state?...
3. Transition Dynamics Consider the Solow growth model with constant population and no techno- logical progress as studied in class. Suppose the economy is initially in the steady state, with the level of per-capita capital stock of kss. The per-capita production function is given by y -f (k) - Akt, 0 < α < 1. In each of the following scenarios, plot the transition time path of per capita capital stock. kt, per-capita output, yt, and per-capita consumption, ct- (1-s...
Most questions answered within 3 hours.
-
What is the net ionic equation for the reaction that would occur
when an aqueous solution...
asked 24 minutes ago -
A
student bought $1000 worth of furniture. What is the equivalent
annual cost if it is...
asked 32 minutes ago -
What taboo subject did Ida B. Wells suggest was consensual
between black men and white women?...
asked 2 hours ago -
You have just been hired by the EPA to help with the new gas
mileage standards...
asked 2 hours ago -
4) A firm is hit by increases in its wage rate, w.
a) How does this...
asked 3 hours ago -
A square current loop 5.4 cm on each side carries a 510 mA
current. The loop...
asked 5 hours ago -
What are five tips in conducting knowledge assessment/literature
review research? Each of these tips needs to...
asked 5 hours ago -
Antigen presenting cells link innate and adaptive immune
responses. In the theoretical scenario where phagosomes cannot...
asked 6 hours ago -
Dealing with conflict, in my opinion, is a skill and an art. I
believe that those...
asked 6 hours ago -
6. A long straight wire with circular cross section and radius
1.5 cm carries a 1.2...
asked 6 hours ago -
Deacon Corporation has provided the following financial data
from its balance sheet and income statement:
Year...
asked 7 hours ago -
List and discuss at least three variables from everyday life for
which you expect the variable ...
asked 7 hours ago