In the neoclassical growth model, suppose the per worker production function is y=2k0.5 Suppose s=0.10, n=0.07, and d=0.06. The steady-state equilibrium capital-labour ratio is k=(Round to two decimal places.)
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- Using the growth accounting equation, assume that the growth rate of output is 13%, the growth of labor is 8% and the growth of capital is 6%. If α=0.6 then growth from technology can be estimated to be:In the neoclassical growth model, the steady-state capital-labor ratio is determined by the equation (A k=y/(n-d) B k= (n+ d)y C) k= s(n + d) D k= (n + d)/sy E)k=sy/(n + d)If we have an aggregate production function of the form Y = AK, at what capital-labor ratio can a steady-state equilibrium be reached?
- Production function is given by Y = Ka(AN)'¯ª, where a=2/3. Initially, the saving rate was equal to s and the economy was in the steady state. Use the Solow growth model to answer the following questions. (Please fill in numbers; use a yomma as a decimal separator: 10,5) 1. In order to increase capital per unit of effective labor in the steady state by a factor of 27 (i.e. to make it 27 times larger), the rate of saving needs to increase by a factor of 2. In order to increase output per unit of effective labor in the steady state by a factor of 4 (i.e. to make it 4 times larger), the rate of saving needs to increase by a factor of 3. Suppose that s=25 percent, the rate of depreciation of capital is equal to 5 percent, the rate of technological progress is equal to 1 percent, and the rate of population growth is equal to 0,25 percent, a=2/3. The steady state level of investment per unit of effective labor is equal toAccording to the neoclassical growth model, the production function of an economy can be represented as Y=f(L,K, A). Which of the following is considered as a decline in technology under this framework? A fall in the capital to labour ratio Depreciation of capital stock A fall in labour to capital ratio. An increase in the number of steps a business must take to obtain government approval to sell a new product Reduction in immigrationHarrod-Domar Growth Model. Given the following equations: Y = F(K) S = sY I = AK %3D c = = K/y S = I a. Assuming that the marginal product of capital is constant and that the production function exhibits constant returns to scale (CRTS), show mathematically how the net savings rate and the capital-output ratio affect the GDP growth rate as predicted by the model. b. Based on your answer in (a), what should a country do in order to achieve economic growth? Explain. c. Given a net savings rate equal to 5% and a capital-output ratio equal to 2, calculate the predicted GDP growth rate.
- Consider the model you developed in Question 1, where labor growth at a constant rate. Suppose that F(K, L) = K0.5 L0.5 with d = 0.1, s = 0.2, n = 0.01, and A = 1, and take a period to be a year. Question 2 Part a Determine capital per worker, income per capita, and consumption per capita in the steady state. Question 2 Part b Now, suppose that the economy is initially in the steady state that you calcu- lated in Part a. Then, s increases to 0.4 Question 2 Part b1 Determine capital per worker, income per capita, and consumption per capita in each of the 10 years following increase in the savings rate Question 2 Part b2 Determine capital per worker, income per capita, and consumption per capita in the new steady state. Question 2 Part b3 Discuss your results, in particular, comment on the speed of adjustment to the new steady state after the change in the savings rate, and the paths followed by capital per worker, income per capita, and consumption per capita.Consider an economy with a Cobb-Douglas production function with α = 1/3 that begins in steady state with a growth rate of technological progress of g of 2 percent. Consider what happens when g increases to 3 percent. (a) What is the growth rate of output per worker before the change? What happens to this growth rate in the long run? (b) Perform a growth accounting exercise for the economy, decomposing the growth rate in output per capita into components contributed by capital per capita growth and technology growth. What is the contribution of the change in g to output per capita growth according to this formula? (c) In what sense is the growth accounting result in part b producing a misleading picture of this experiment? Explain why this is the case.In the Solow model, suppose the per worker production function is y = 5 k0.5 Suppose s = 0.11, n = 0.07, and d = 0.08 Calculate the steady-state equilibrium capital-labor ratio. (Round to two decimal places.) k =
- If the production function is y = k³, s == .4, and & = .2, what is the steady-state level of: k yAssume an endogenous growth model with labour augmenting technology. The production function is Y=RK,AN), with A = 2(KIN) such that y = 2k. If the savings rate is s= 0.08, the rate of population growth is n = 0.03, and the rate of depreciation is d= 0.04, what is the growth rate of output per capita? Multiple Choice 1% 3% 4% 7% 9%An economy has the per-worker production function yt=f(kt)=4kt)0.4, where yt is the output per worker and kt is the capital-labor ratio. The depreciation rate is 0.15, and the population growth rate is 0.04. Saving is St=0.5Yt, where St is total national saving and Yt is total output. The slope of the per worker production function is given by f' (kt)=1.6kt-0.6 . What is the steady state value of capital-labor ratio, k*? Round your answer to at least 2 decimal places.