Question

Use information to answer questions below.

Y = f(k) = k^{a}, where a = 0.25

S = 0.3

δ = 0.2

n = 0.05

g= 0.02

a. Find the steady state capital per effective worker, output per effective worker, investment per effective worker, and consumption per effective worker.

b. Find the steady state growth rate of capital per worker, output per worker, investment per worker, and consumption per worker.

c. Find the steady state growth rate of capital, output, investment, and consumption.

d. Show using two separate graphs the effects on the Solow growth model (i) an increase in the savings rate, and (ii) and an increase in depreciation rate, the population growth rate, or the technological growth rate.

Answer #1

When there is an increase in the savings rate , this will shift the investment function upward . As a result, steady state capital per effective worker increases and output per effective worker increases.

When there is increase in depreciation rate , population growth rate or technological growth rate then the break even investment line tilts upwards . As a result, steady state capital and output per effective worker decreases.

Answer the following
Y = f(k) = ka, where a = 0.25
S = 0.3
δ = 0.2
n = 0.05
g= 0.02
a. Find the steady state capital per effective worker, output
per effective worker, investment per effective worker, and
consumption per effective worker.
b. Find the steady state growth rate of capital per worker,
output per worker, investment per worker, and consumption per
worker.
c. Find the steady state growth rate of capital, output,
investment, and consumption.
d....

Assume that an economy is described by the Solow growth model as
below:
Production Function: y=50K^0.4 (LE)^0.6
Depreciation rate: S
Population growth rate: n
Technological growth rate:g
Savings rate: s
a. What is the per effective worker production function?
b. Show that the per effective worker production function
derived in part a above exhibits diminishing marginal returns in
capital per effective worker
C.Solve for the steady state output per effective worker as a
function of s,n,g, and S
d. A...

Answer the following questions using the basic Solow growth
model, without population growth or technological progress.
(a) Draw a diagram with per worker output, y, consumption, c,
saving, s and investment, i, on the vertical axis and capital per
worker, k, on the horizontal condition. On this diagram, clearly
indicate steady-state values for c, i, and y. Briefly outline the
condition that holds in the steady- state (i.e. what is the
relationship between investment and the depreciation of
capital?).
(b)...

Consider the production function Y = F (K, L) = Ka *
L1-a, where 0 < α < 1. The national saving rate is
s, the labor force grows at a rate n, and capital depreciates at
rate δ.
(a) Show that F has constant returns to scale.
(b) What is the per-worker production function, y = f(k)?
(c) Solve for the steady-state level of capital per worker (in
terms of the parameters of the model).
(d) Solve for the...

Consider the Solow growth model. The production function is
given by Y = K^αN^1−α, with α = 1/3. There are two countries: X and
Y. Country X has depreciation rate δ = 0.05, population growth n =
0.03, and savings rate s = 0.24. Country X starts with initial
capital per worker k0 = 1
Country Y has depreciation rate δ = 0.08, population growth n =
0.02, and savings rate s = 0.3. Country Y starts with capital per...

Consider an economy described by the production function:
Y = F(K, L) = K0.3L0.7.
Assume that the depreciation rate is 5 percent per year.
Make a table showing steady-state capital per worker, output per
worker, and consumption per worker for saving rates of 0 percent,
10 percent, 20 percent, 30 percent, and so on. Round your answers
to two decimal places. (You might find it easiest to use a computer
spreadsheet then transfer your answers to this table.)
Steady State...

Question #1: The Basic Solow Model
Consider an economy in which the population grows at the rate of
1% per year. The per worker production function is y = k6, where y
is output per worker and k is capital per worker. The depreciation
rate of capital is 14% per year. Assume that households consume 90%
of their income and save the remaining 10% of their income.
(a) Calculate the following steady-state values of
(i) capital per worker
(ii) output...

17. Solow growth The production function in your country is: Y =
K^0.5(LE)^0.5.
Your economy saves 24% of output each period, and 5% of the
capital stock depreciates each period. The population grows 2%
annually. Technology grows 1% annually. You begin with 1000 workers
and 1 unit of capital, and a tech- nology level equal to 1.
a) Write the production function in per-eective-worker terms, so
that per-effective-worker output (y = Y/LE ) is a function of
per-effective-worker capital (k=...

Question 1
Growth Suppose that the economy’s production function is: ?? =
?? 0.35(???? ) 0.65 and that the saving rate (s) is equal to 10%
and that the rate of depreciation (?) is equal to 2%. Further,
suppose that the number of workers grows at 5% per year and that
the rate of technological progress is 1% per year.
a. Find the steady-state values of:
• capital stock per effective worker
• output per effective worker
• consumption per...

13. Suppose there is an increase in government spending in a
closed economy. In medium-run such a fiscal policy will cause:
none of the other answers is correct.
ambiguous effects on the neutral real interest rate
the nominal wage to rise
no change in the neutral real interest rate
the neutral real interest rate to rise
14. Suppose the economy is initially in the steady state.
According to Solow model without technological progress, an
increase in the depreciation rate (δ)...

ADVERTISEMENT

Get Answers For Free

Most questions answered within 1 hours.

ADVERTISEMENT

asked 5 minutes ago

asked 5 minutes ago

asked 8 minutes ago

asked 11 minutes ago

asked 14 minutes ago

asked 16 minutes ago

asked 32 minutes ago

asked 37 minutes ago

asked 37 minutes ago

asked 37 minutes ago

asked 37 minutes ago

asked 38 minutes ago