Question

Suppose the production of a country is Y =
K^{0.2}(EL)^{0.8}. And its depreciation rate is
0.07, population growth rate is 0.02, technology growth rate is
0.01, saving rate is 0.30.

**Answer the following questions.**

(a) What is the long-run growth rate of **per**
**worker output**?

(b) What is the long-run growth rate of
**aggregate** **output**?

Answer #1

Suppose the production of a country is Y equals K to the power
of 0.2 end exponent left parenthesis E L right parenthesis to the
power of 0.8 end exponent. And its depreciation rate is 0.07,
population growth rate is 0.02, technology growth rate is 0.01,
saving rate is 0.30. (a) What is the long-run growth rate of per
worker output? (Enter decimals. Numbers only) 0.01 (b) What is the
long-run growth rate of aggregate output? (Enter decimals. Numbers
only)...

Suppose an economy is described by the following production
function:
Y = K1/2 (EL)1/2
The savings rate in the economy is 0.40, population is growing
at a rate of 0.01, technological progress is growing at a rate of
0.01, and the depreciation rate is 0.02.
What is the steady state level of output per effective
worker?

Portugal has the following per-worker production function:
y=3k^0.05
Depreciation rate is 0.08, population growth rate is 0.02.
Saving is S=0.2Y, where S is national saving and Y is national
output.
(a) what are the steady state value of capital-labour ratio,
output per worker and consumption per worker?
(b) Suppose that national saving increases to 0.4, what are the
steady state value of capital-labour ratio, output per worker and
consumption per worker?
(c) Suppose depreciation rate increases to 0.20, what are...

Suppose an economy is described by the following production
function:
Y = K1/2 (EL)1/2
The savings rate in the economy is 0.40, population is growing
at a rate of 0.01, technological progress is growing at a rate of
0.01, and the depreciation rate is 0.02.
What is the steady state level of investment per effective
worker?

Suppose an economy is described by the following production
function:
Y = K1/2 (EL)1/2
The savings rate in the economy is 0.40, population is growing
at a rate of 0.01, technological progress is growing at a rate of
0.01, and the depreciation rate is 0.02.
What is the Golden Rule level of capital per effective worker?
(Use two decimal places)

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...

Suppose Canada’s aggregate production function is given by the
following:
Y = K^1/3 *(AN)^2/3
Variables are deﬁned as they were in class. Suppose the savings
rate in Canada is 20% (s = 0.2), the depreciation rate is 5% (δ =
0.05), the population growth rate is 2% (gN = 0.02), and the growth
rate of technology is 4% (gA = 0.04).
a) Solve for the equilibrium level of capital per eﬀective worker (
K/AN ) and output per eﬀective worker...

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...

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=...

The economies of two countries, Thrifty and Profligate, have the
same production functions and depreciation rates. There is no
population growth in either country. The economies of each country
can be described by the Solow growth model. The saving rate in
Thrifty is 0.3. The saving rate in Profligate is 0.05.
(a) Which country will have a higher level of steady-state
output per worker?
(b) Which country will have a higher growth rate of output per
worker in the steady...

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