Question

QUESTION 18 5 points Save Answer Say that the economy is in steady state. Assume now that the government implements an important educational program that makes college more accessible to the population. As a result, there is an improvement of technology and productivity in the economy. The other parameters in the economy remain constant. Comparing the new steady state with the original steady state, you can claim that output per worker and capital per worker have risen output per worker has risen, but capital per worker has fallen output per worker has fallen, but capital per worker has risen None of the above/below output per worker and capital per worker have fallen QUESTION 19 5 points Save Answer Say that, given the wonderful weather in the city, many workers from other states move to Los Angeles to look for work. As a result Real wages W/P will decrease in Los Angeles Real wages W/P will increase in Los Angeles It is not possible to say whether real wages will increase or decrease, it depends on how many workers move to Los Angeles Real wages W/P will remain unchanged None of the above/below

QUESTION 18

1. Say that the economy is in steady state. Assume now that the government implements an important educational program that makes college more accessible to the population. As a result, there is an improvement of technology and productivity in the economy. The other parameters in the economy remain constant. Comparing the new steady state with the original steady state, you can claim that

   		output per worker and capital per worker have risen
   		output per worker has risen, but capital per worker has fallen
   		output per worker has fallen, but capital per worker has risen
   		None of the above/below
   		output per worker and capital per worker have fallen

2. QUESTION 19

3. Say that, given the wonderful weather in the city, many workers from other states move to Los Angeles to look for work. As a result

   		Real wages W/P will decrease in Los Angeles
   		Real wages W/P will increase in Los Angeles
   		It is not possible to say whether real wages will increase or decrease, it depends on how many workers move to Los Angeles
   		Real wages W/P will remain unchanged
   		None of the above/below

Answer 1

let take ,

Y=A*K^0.5*L^0.5

Y/L=A*(K/L)^0.5

y=A*k^0.5. { y is Income per worker and k is capital per worker.

Iet say saving rate is s.

Investment per worker=s* y=s*(A*k^0.5)

consumption per worker=(1-s)y=(1-s)*(A*k^0.5)

Increase in productivity will increase value of A.

So output per worker Increase ,so saving per worker and thus Investment per worker will increase.

As income per worker Increase so consumption per worker Increase.

Option A is right

When workers move los Angels, the supply of labour Increases and labour supply shift downward which leads to fall in equilibrium market nominal wage .

Real wage=nominal wage/ price index

Decrease in nominal wage and price remain unchanged will decrease real wage .

Option A is correct