Homework Answers
Option B is correct - The steady state equilibrium level of output and capital goes down.
As a result of fall in savings rate, there will be decrease in the money deposited in the banks. Due to which there will be less money to borrow from bank and the interest rates will increase. Increase in interest rates will lead to decrease in investments in the economy. Capital will decrease due to decrease in investments. And we know that there is positive relationship between capital accumulation and output level in the economy, the output will decrease too.
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Question 5 If the saving rate falls, which of the following is true? human capital increases....
1. Consider a country that is initially in steady state. Suppose the saving rate increases. Moreover,...
1. Consider a country that is initially in steady state. Suppose the saving rate increases. Moreover, the population growth rate increases by 1% but the capital depreciation rate falls by 1%. According to the Solow–Swan model, the per capita capital stock increases, and the country moves to a new, higher steady state level of per capita income. Answer true, false, or uncertain. Please briefly explain your answer. 2. Consider the country of Solow, which is described by the Solow–Swan model....
Consider an economy such that Output per worker: yt = 2k£.5 Capital per worker: kt Saving...
Consider an economy such that Output per worker: yt = 2k£.5 Capital per worker: kt Saving rate: s = 0.2 Depreciation rate: 8 = 0.15 Workforce growth rate: gN = 0.25 sy-(8+g)k¢ Evolution of capital per worker: kt+1- kt = 1+gN In the steady state, capital per worker does not change over time. Let k* denote the steady state level of capital per worker In the steady state, capital per worker is а) 8 b) 4 c) 2 d) 1...
a）Assume that country A has the following production function Y=K^0.3 L^0.7 Its saving rate is 20%...
a）Assume that country A has the following production function Y=K^0.3 L^0.7 Its saving rate is 20% per year. The depreciation rate is assumed to be 5% per year. What is the steady state level of capital stock per capital, K*？What is the steady state level of output per capital, Y*? What is the steady state level of c*? Show the results in a suitable diagram. b) At year 1,K=6. Is this a steady state? Find out the values of GDP...
if the capital stock per worker is 8, the saving rate (s) is 12, the capital...
if the capital stock per worker is 8, the saving rate (s) is 12, the capital share (α) is 13 and the depreciation rate (δ) is 18 , then: a. the capital stock per worker will grow towards the steady state b. the capital stock per worker will shrink towards the steady state c. none d. investment per worker in the economy is larger than depreciation per worker e. the economy is not in the steady state yet
If a war destroys a large portion of a country's capital stock but the saving rate...
If a war destroys a large portion of a country's capital stock but the saving rate is unchanged, the Solow model predicts that output will grow and that the new steady state will approach: O the same level of output per person as before. O a higher level of output per person than before. O a lower level of output per person than before. O the Golden Rule level of output per person. Exhibit: Steady-State Consumption II Sk* Sk* f**...
Consider an economy such that Output per worker: yt = 2k0.5 Capital per worker: kt Depreciation...
Consider an economy such that Output per worker: yt = 2k0.5 Capital per worker: kt Depreciation rate: 8 = 0.4 Saving rate: s = 0.2 Evolution of capital per worker: kt+1- kt = syt - Skt In the steady state, capital per worker does not change over time Let k* denote the steady state level of capital per worker Question 1.In the steady state, capital per worker is a)8 b)4 c)2 d)1 Question 2.Which one of the following statements is...
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,...
4. If the production function is given by Y=K2L13 and the saving rate saving rate (s)...
4. If the production function is given by Y=K2L13 and the saving rate saving rate (s) equals the depreciation rate (8). Find the numerical values of the steady state capital and output?
Assume a = . Use the Solow Model to answer this question. If the saving rate...
Assume a = . Use the Solow Model to answer this question. If the saving rate increases by 10%, capital per capita in steady-state would increase by 15% 0% 5% 10%
Suppose the production function is given by ? = ?^a?'^1-a, where Y is output; K is...
Suppose the production function is given by ? = ?^a?'^1-a, where Y is output; K is capital stock and N is Labor (look Appendix in Chapter 16). a. Is this production function characterized by constant return to scale? How? Show the work. b. Write this production function as a relationship between output per worker and capital per worker. c. If saving (S) equals investment (I), and S = sY, where s is saving rate, what is the corresponding investment per...
Consider an economy such that Output per worker: yt = 2k£.5 Capital per worker: kt Saving rate: s = 0.2 Depreciation rate: 8 = 0.15 Workforce growth rate: gN = 0.25 sy-(8+g)k¢ Evolution of capital per worker: kt+1- kt = 1+gN In the steady state, capital per worker does not change over time. Let k* denote the steady state level of capital per worker In the steady state, capital per worker is а) 8 b) 4 c) 2 d) 1...
If a war destroys a large portion of a country's capital stock but the saving rate is unchanged, the Solow model predicts that output will grow and that the new steady state will approach: O the same level of output per person as before. O a higher level of output per person than before. O a lower level of output per person than before. O the Golden Rule level of output per person. Exhibit: Steady-State Consumption II Sk* Sk* f**...
Consider an economy such that Output per worker: yt = 2k0.5 Capital per worker: kt Depreciation rate: 8 = 0.4 Saving rate: s = 0.2 Evolution of capital per worker: kt+1- kt = syt - Skt In the steady state, capital per worker does not change over time Let k* denote the steady state level of capital per worker Question 1.In the steady state, capital per worker is a)8 b)4 c)2 d)1 Question 2.Which one of the following statements is...
4. If the production function is given by Y=K2L13 and the saving rate saving rate (s) equals the depreciation rate (8). Find the numerical values of the steady state capital and output?
Assume a = . Use the Solow Model to answer this question. If the saving rate increases by 10%, capital per capita in steady-state would increase by 15% 0% 5% 10%
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