Answering only first 4 parts
Solow Growth Model: Consider an economy with the following features: • Y = K 0.25 0.75...
In the Solow growth model without population growth, if an economy has a steady-state value of the marginal product of capital (MPK) of 0.125, a depreciation rate of 0.1, and a saving rate of 0.225, then the steady-state capital stock per worker: Select one: a. is less than the Golden Rule level. O b. is greater than the Golden Rule level. c. could be either above or below the Golden Rule level. d. equals the Golden Rule level.
parts a-e please °uestion #3 Suppose that the economy is summarized by the following Solow economy with technological progress: Production Function: Y = 10K0-3(LE)0.7 Savings rte, s= 0.2 Depreciation rate: 10% (ie, δ 0.1). Population growth rate: 2% (ie, n 02). Technological growth rate: 1% (ie, g ,01). Derive the per effective worker production function for this economy. a. b. Based on your answer in part a above, derive the formula for marginal product of capital (MPK) and show that...
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...
Econ 202 Problems Chapter 12 – Long-run economic growth 1. The production function of an economy is: Y= A * K0,3 * H0.7 a. What is real output when K = 10, H = 40 and A = 5? (2 point) b. Does this production function exhibit diminishing marginal productivity of capital? Calculate MPK if K increases from 10 to 20 and from 20 to 30, keeping H and A constant. Assume H = 70, A = 4. (5 points)...
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...
Suppose an economy described by the Solow model has the following production function: 1/2 1/2 Y=K (LE) . a. For this economy, what is f(k)? b. Use your answer to part (a) to solve for the steady-state value of y as a function of s, n, g, and ?. c. Two neighboring economies have the above production function, but they have different parameter values. Atlantis has a saving rate of 28 percent and a population growth rate of 1 percent...
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...
Consider an economy described by the production function: Y = F(K, L) = (0.25 0.75 a. What is the per-worker production function? y= b. Assuming no population growth or technological progress, find the steady-state capital stock per worker (k*), output per worker (y*), and consumption per worker (c*) as a function of the saving rate and the depreciation rate. k* = y* =
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. In the Solow model the key driver of economic growth is a) accumulation of human capital b) accumulation of physical capital c) technological progress d) quality of institutions Kt+1-K The capital accumulation of physical capital is the key equation 12. Let AK+1 of the Solow model, which is the following a) Kt+1 +(1- d)K b) AK41= I+(1 - d)K c) Kt41 Ki-dK d)AK1I- K 13. According to the Solow diagram, no matter if the initial level of capital, Ko,...