Question

When St=0.4Yt，k? y? c?

Suppose that an economy has the per-worker production function given as: y = 3405 where y is output per worker and k is capital per worker. In addition, national savings is given as: S = 0.37 where S is national savings and Y is total output Use the production and savings functions on your left and the depreciation and population growth rates below to answer the following questions. (Round all numerical responses to one decimal place) Depreciation rate (d) = 0.1 Population growth rate (n) = 0.05 What is the steady-state value of the capital-labor ratio, K? 36 What is the steady-state value of output per workery 18 What is the steady-state value of consumption per worker, c? 12.6 Use the same production function as before, but now let the savings rate be 0.4 rather than 0.3. Your new parameters then are S, -0.47 Depreciation rate (d) = 0.1 Population growth rate (n) = 0.05 Again, solve for k, y, and c. What is the steady-state value of the capital-labor ratio,

Answer 1

s=0.4

0.4*3√k=(0.1+0.05)K=0.15k

0.4*3/0.15=√k

8=√k

k=64

y=3*√64=3*8=24

c=(1-s)*y=0.6*24=14.4

Steady state capital labour ratio=64