3. Show, using diagrams, the effects on output of an increase in the marginal propensity to save in the (i) basic Keynesian model (the 45-degree diagram) and (ii) the Solow- Swan model. Explain any differences. 4. Consider two countries Milkie' and 'Cookie. The two countries have identical per capita production function, y = Ak.S, with initially the same level of technology, A-1. Tutorial Tasks MacBook Pro & % # 7 6 2 4 5 P T E W CO 0 3
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question r question 4 ECONI002 Introductory Macroeconomics Also, assume that the saving rate is s-0.2 for '...
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....
Countries 1 and 2 have the following production function: y = Akl. The saving rate in...
Countries 1 and 2 have the following production function: y = Akl. The saving rate in Country 1 is 5%, and in Country 2 is 20%. The two countries have the same level of productivity (or technology) A, and the same rate of depreciation 8. According to the Solow model, what is the ratio of steady-state output per capita in Country 1 to steady-state output per capita in Country 2? Show your calculations and provide intuition for your finding.
1. Exercise 1. Predicting steady states and growth rates from Solow Model In this exercise, assume...
1. Exercise 1. Predicting steady states and growth rates from Solow Model In this exercise, assume a, -1/3. Answer the following questions using the Solow model without population growth a) First, assuming no differences in TFP. Assume that countries are in steady state. Following the Solow model, use the data in the table to predict the ratio of per capita GDP in each country relative to that in the US. Data Data Data Countries Saving rate Model (assume A =...
1. Exercise 1. Predicting steady states and growth rates from Solow Model In this exercise, assume a = 1/3. Answer...
1. Exercise 1. Predicting steady states and growth rates from Solow Model In this exercise, assume a = 1/3. Answer the following questions using the Solow model without population growth. a) First, assuming no differences in TFP. Assume that countries are in steady state. Following the Solow model, use the data in the table to predict the ratio of per capita GDP in each country relative to that in the US. Data Data Data Model (assume A = Aus) predicted...
Link w DOC d. 16. nase 29. According to the Solow-Swan theory of long-run economic growth,...
Link w DOC d. 16. nase 29. According to the Solow-Swan theory of long-run economic growth, higher rates of saving for, equivalently, investment) lead to a higher income per person and higher consumption per person b. higher income per person and lower consumption per person c. higher income per person but not necessarily higher consumption per person d. higher consumption per person if the saving rate rises from an already high level and lower consumption per person if the saving...
please assume that the saving rate is 0.2 (i.e. s = 0.2) and the theta is...
please assume that the saving rate is 0.2 (i.e. s = 0.2) and the
theta is 0.11
1. Consider an economy in which the population grows at the rate 5% per year. It has the following production function Y = KL1-9 where is given by the last two digits of your student number divided by 100 (e.g. if your student number is SB6-1234-5, then the value of is 45/100 = 0.45). The depreciation rate of capital is 5% per year....
3.) There are two countries, Anihc (country A) and Bapan (country B), with the same production...
3.) There are two countries, Anihc (country A) and Bapan (country B), with the same production function . However, country A has saving rates of 0.2, depreciation rate of 0.2 and population growth of 0.2; while country B has saving rates of 0.1, depreciation rate of 0.15 and population growth of 0.05. Using the Solow model: a.) Find the steady state capital-labor ratio for each country. b.) Find the steady state output per worker, and the steady state consumption per...
Consider the Solow growth model. Suppose that with d=0.1, s=0.2, n=0.01, and z=1 and take a...
Consider the Solow growth model. Suppose that with d=0.1, s=0.2, n=0.01, and
z=1 and take a period to be one year.
a. Determine capital per worker, income per capita, and consumption
per capita in the steady-state. Show the theoretical derivation and
numerical solution.
b. Now suppose that the economy is initially in the steady-state
that you calculated in part a, and savings increases to s=0.4.
Determine capital per worker, income per capita, and consumption
per capita in the new steady...
12. Assume two economies are identical in every way except that one has a higher population...
12. Assume two economies are identical in every way except that one has a higher population growth rate. According to the Solow growth model, in the steady state the country with the higher population growth rate will have a ______ level of output per person and ______ rate of growth of output per worker as/than the country with the lower population growth rate. A) lower; a lower B) higher; the same C) higher; a higher D) lower; the same
1. Imagine that you are hired by the president of the country of Bogatya as an...
1. Imagine that you are hired by the president of the country of Bogatya as an economic adviser. Currently the country is enjoying a constant but comfortably high standard of living. However, the neighboring country of the Republic of Orania is extremely poor. a. Your initial analysis of the economic data from the region leads you to discover that Bogatya has a much higher level of total factor productivity (A) than Orania but otherwise the two countries seem very similar...
Countries 1 and 2 have the following production function: y = Akl. The saving rate in Country 1 is 5%, and in Country 2 is 20%. The two countries have the same level of productivity (or technology) A, and the same rate of depreciation 8. According to the Solow model, what is the ratio of steady-state output per capita in Country 1 to steady-state output per capita in Country 2? Show your calculations and provide intuition for your finding.
1. Exercise 1. Predicting steady states and growth rates from Solow Model In this exercise, assume a, -1/3. Answer the following questions using the Solow model without population growth a) First, assuming no differences in TFP. Assume that countries are in steady state. Following the Solow model, use the data in the table to predict the ratio of per capita GDP in each country relative to that in the US. Data Data Data Countries Saving rate Model (assume A =...
1. Exercise 1. Predicting steady states and growth rates from Solow Model In this exercise, assume a = 1/3. Answer the following questions using the Solow model without population growth. a) First, assuming no differences in TFP. Assume that countries are in steady state. Following the Solow model, use the data in the table to predict the ratio of per capita GDP in each country relative to that in the US. Data Data Data Model (assume A = Aus) predicted...
Link w DOC d. 16. nase 29. According to the Solow-Swan theory of long-run economic growth, higher rates of saving for, equivalently, investment) lead to a higher income per person and higher consumption per person b. higher income per person and lower consumption per person c. higher income per person but not necessarily higher consumption per person d. higher consumption per person if the saving rate rises from an already high level and lower consumption per person if the saving...
please assume that the saving rate is 0.2 (i.e. s = 0.2) and the
theta is 0.11
1. Consider an economy in which the population grows at the rate 5% per year. It has the following production function Y = KL1-9 where is given by the last two digits of your student number divided by 100 (e.g. if your student number is SB6-1234-5, then the value of is 45/100 = 0.45). The depreciation rate of capital is 5% per year....
Consider the Solow growth model. Suppose that with d=0.1, s=0.2, n=0.01, and
z=1 and take a period to be one year.
a. Determine capital per worker, income per capita, and consumption
per capita in the steady-state. Show the theoretical derivation and
numerical solution.
b. Now suppose that the economy is initially in the steady-state
that you calculated in part a, and savings increases to s=0.4.
Determine capital per worker, income per capita, and consumption
per capita in the new steady...
1. Imagine that you are hired by the president of the country of Bogatya as an economic adviser. Currently the country is enjoying a constant but comfortably high standard of living. However, the neighboring country of the Republic of Orania is extremely poor. a. Your initial analysis of the economic data from the region leads you to discover that Bogatya has a much higher level of total factor productivity (A) than Orania but otherwise the two countries seem very similar...
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