Homework Answers
Answer
The correct answer is "option 2"
an increase in consumption per worker in the long-run.
The golden rule of capital is C/N = Y/N - d K/N. The steady-state is the state in which consumption will be highest. If the savings rate is above the golden rule savings rate it is inefficient and in the long run, leads to a lower steady rate consumption. When the savings rate falls and assuming it is now at the golden rule savings rate then consumption will increase.
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Suppose the saving rate is initially greater than the golden rule saving rate. A reduction 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...
the domestic interest rate would leduction in E C) an increase in E D) an increase...
the domestic interest rate would leduction in E C) an increase in E D) an increase in investment E) none of the above Answer Questions (30 points, 20 questions, 1.5 points for cach question) 1. For this question this question, assume that the economy is initially operating at the natural level of output. A monetary expansion will cause in the real wage in the medium run. con will cause (increase/decrease/no change) 2. Use the following information to answer the questions...
The consumption per worker under the golden rule (in Lecture 5): a. none O b. is...
The consumption per worker under the golden rule (in Lecture 5): a. none O b. is equal to the wage in the golden rule O c. is the saving rate times the capital per worker O d. can only be obtained if the saving rate equals the depreciation rate e. is the lowest consumption per worker the economy can reach in any steady state
1. Let's review the setup of the Solow growth model with saving rate s, constant population...
1. Let's review the setup of the Solow growth model with saving rate s, constant population growth rate n, and constant technology growth rate g Kt+1(1-8)K Lt+ 1 = (1 + n) Et+1-(1+g)E a) b) c) What is the steady-state capital and output per effective worker? (5pts) Solve for the golden rule level of capital. What is the saving rate then? (5pts) Many health experts have argued that malnutrition leads to reduced work capacity. Suppose in the Solow model, this...
1. Let's review the setup of the Solow growth model with saving rate s, constant population...
1. Let's review the setup of the Solow growth model with saving rate s, constant population growth rate n, and constant technology growth rate g Kt+1(1-8)K Lt+ 1 = (1 + n) Et+1-(1+g)E a) b) c) What is the steady-state capital and output per effective worker? (5pts) Solve for the golden rule level of capital. What is the saving rate then? (5pts) Many health experts have argued that malnutrition leads to reduced work capacity. Suppose in the Solow model, this...
Consider an economy described by the following production function: Y=K0.2L0.8 Suppose the depreciation rate is 10%....
Consider an economy described by the following production function: Y=K0.2L0.8 Suppose the depreciation rate is 10%. Explain what the golden rule level of capital is. For this economy, calculate the golden rule level of capital per worker, output per worker, depreciation per worker and consumption per worker. Plot the results obtained in (b) above. Calculate the saving rate that would give the golden rule level. Explain what happens to the consumption level if the saving rate departs from the one...
If the economy has more capital than in the Golden Rule steady state, reducing the saving...
If the economy has more capital than in the Golden Rule steady state, reducing the saving rate will: A.increase steady-state income but decrease steady-state consumption. B.decrease both steady-state income and steady-state consumption. C.increase both steady-state income and steady-state consumption. D.decrease steady-state income but increase steady-state consumption.
2. Suppose that the US is initially at the golden-rule level of steady-state capital accumulation given...
2. Suppose that the US is initially at the golden-rule level of steady-state capital accumulation given the current rates of depreciation, technological progress, and population growth a. What does “the golden-rule level of steady-state capital accumulation” mean? b. When there are positive rates of depreciation, technological progress, and population growth, explain how each of the following variables is changing over time when the economy is at the golden-rule level of capital: i. Labor ii. Labor efficiency units iii. Total capital...
(15 Points) What saving rate maximizes output per worker for each country? What saving rate maximizes...
(15 Points) What saving rate maximizes output per worker for each country? What saving rate maximizes consumption per worker for each country? And find the Golden Rule level of consumption, output, investment per worker for each country.
Question 12 0.2 pts Suppose there is a permanent increase in a country's saving rate. This...
Question 12 0.2 pts Suppose there is a permanent increase in a country's saving rate. This increase in the saving rate will cause: O a permanently higher level of capital per worker. a permanently higher level of output per capita. a permanently faster growth rate of output. both of the first two answers above O none of the above.
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...
the domestic interest rate would leduction in E C) an increase in E D) an increase in investment E) none of the above Answer Questions (30 points, 20 questions, 1.5 points for cach question) 1. For this question this question, assume that the economy is initially operating at the natural level of output. A monetary expansion will cause in the real wage in the medium run. con will cause (increase/decrease/no change) 2. Use the following information to answer the questions...
The consumption per worker under the golden rule (in Lecture 5): a. none O b. is equal to the wage in the golden rule O c. is the saving rate times the capital per worker O d. can only be obtained if the saving rate equals the depreciation rate e. is the lowest consumption per worker the economy can reach in any steady state
1. Let's review the setup of the Solow growth model with saving rate s, constant population growth rate n, and constant technology growth rate g Kt+1(1-8)K Lt+ 1 = (1 + n) Et+1-(1+g)E a) b) c) What is the steady-state capital and output per effective worker? (5pts) Solve for the golden rule level of capital. What is the saving rate then? (5pts) Many health experts have argued that malnutrition leads to reduced work capacity. Suppose in the Solow model, this...
1. Let's review the setup of the Solow growth model with saving rate s, constant population growth rate n, and constant technology growth rate g Kt+1(1-8)K Lt+ 1 = (1 + n) Et+1-(1+g)E a) b) c) What is the steady-state capital and output per effective worker? (5pts) Solve for the golden rule level of capital. What is the saving rate then? (5pts) Many health experts have argued that malnutrition leads to reduced work capacity. Suppose in the Solow model, this...
(15 Points) What saving rate maximizes output per worker for each country? What saving rate maximizes consumption per worker for each country? And find the Golden Rule level of consumption, output, investment per worker for each country.
Question 12 0.2 pts Suppose there is a permanent increase in a country's saving rate. This increase in the saving rate will cause: O a permanently higher level of capital per worker. a permanently higher level of output per capita. a permanently faster growth rate of output. both of the first two answers above O none of the above.
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