Given the production function, y = kaA- assume that the economy is in equilibrium in year...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Given the production function, y = kaA- assume that the economy is in equilibrium in year zero with Beginning in year zero, the growth rate of technology declines to two percent. Output in year zero is unaffected, but the slower rate of technological progress effects the level of output in each subsequent year. [All references to output and capital are per worker.] 1. Calculate the level of output in year three. [Round your answer to the nearest thousandth.] g=0.04 gL=0.02 8 = 0.18 Noticing the growth slowdown, businesses try to keep output rising by adding more to the capital stock. 3. 2. Calculate the growth rate of capital at which the growth rate of output is four percent, even though the growth rate of technology is two percent. K 4. s=0.2 a = 1/3 yv = $40 Use your answers to questions 1 and 2 to calculate the saving rate (s) in year three so that the level of output in year four is four percent higher than year three. S 9L+9A+8 kt = kt-1(1 8 9,)+SYt-1 Xt+j = x(1 + gx) =Y k = (P)(/1-a) x At 9x = X-X-1 XI-1 gytagkt + (1 - )gA Ct = y(1-s) Assume that the higher saving rate in question 3 is permanent. On one k-y graph, show the economy a) in the original equilibrium in year zero, Yt = (4/1-a) x At b) in the original equilibrium in year ten, c) in year three (disequilibrium, question 1). d) in the new equilibrium in year ten, with reduced g, but no change in s, e) in the new equilibrium in year ten, given the changes in both g and s. Given the production function, y = kaA- assume that the economy is in equilibrium in year zero with Beginning in year zero, the growth rate of technology declines to two percent. Output in year zero is unaffected, but the slower rate of technological progress effects the level of output in each subsequent year. [All references to output and capital are per worker.] 1. Calculate the level of output in year three. [Round your answer to the nearest thousandth.] g=0.04 gL=0.02 8 = 0.18 Noticing the growth slowdown, businesses try to keep output rising by adding more to the capital stock. 3. 2. Calculate the growth rate of capital at which the growth rate of output is four percent, even though the growth rate of technology is two percent. K 4. s=0.2 a = 1/3 yv = $40 Use your answers to questions 1 and 2 to calculate the saving rate (s) in year three so that the level of output in year four is four percent higher than year three. S 9L+9A+8 kt = kt-1(1 8 9,)+SYt-1 Xt+j = x(1 + gx) =Y k = (P)(/1-a) x At 9x = X-X-1 XI-1 gytagkt + (1 - )gA Ct = y(1-s) Assume that the higher saving rate in question 3 is permanent. On one k-y graph, show the economy a) in the original equilibrium in year zero, Yt = (4/1-a) x At b) in the original equilibrium in year ten, c) in year three (disequilibrium, question 1). d) in the new equilibrium in year ten, with reduced g, but no change in s, e) in the new equilibrium in year ten, given the changes in both g and s.
Expert Answer:
Answer rating: 100% (QA)
To answer the questions well go step by step 1 To calculate the level of output in year three we need to use the production function and the given parameters The production function is given as y ka A... View the full answer
Related Book For
Economics of Money Banking and Financial Markets
ISBN: 978-0134733821
12th edition
Authors: Frederic S. Mishkin
Posted Date:
Students also viewed these accounting questions
-
A 0.810-kg ball has a velocity of 4.16 m/s to the right. Calculate the momentum of the ball in kg m/s. What velocity does a 10.-g bullet need to have in order to have the same momentum as the ball?...
-
1. In the classical model, it is thought that the long-run: A. and short-run aggregate supply curves are both upward sloping. B. aggregate supply curve is vertical and the short-run aggregate supply...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Wesley and Camilla (ages 90 and 88, respectively) live in an assisted care facility and for 2018 and 2019 received their support from the following sources: a. Which persons are eligible to treat...
-
Two coils are wrapped around each other as shown in Fig. 30.3. The current travels in the same sense around each coil. One coil has self-inductance L.. and the other coil has selfinductance L2?? The...
-
Grady is a 45-year-old employee with AMUCK Garbage Corporation. AMUCK pays group-term life insurance premiums for employees, and Grady chose the maximum face amount of $120,000. What amount, if any,...
-
If the Simplico mine is solved with all parameters remaining the same except that \(u=1.2\) is changed to \(u=1.3\), the value of the lease remains unchanged to within three decimal places. Indeed,...
-
When customers purchase a service, they are actually getting a bundle of service attributes. List and describe these attributes using a car-rental agency, a convenience store and a radio station.
-
Brendan's unmarried daughter, Nicole, lived with him in his home for the entire year. Brendan is divorced. He owns his own home and pays all of the costs of upkeep for the home. Brendan paid over one...
-
The Mac Davis Company specializes in the purchase, renovation, and resale of older homes. Mac employs several carpenters and painters to do the work for him. It is essential for him to have accurate...
-
Two months ago, a longstanding customer set up an investment portfolio which is recommended for long term investors. He has asked for the investments to be sold even though there is a significant...
-
Dividends of the company increases 7 0 % when economy expands and increases 2 0 % when economy contracts. There is 4 5 % probability that economy will contract next year. What is the probability that...
-
A "frozen-in" uniform polarisation density P exists in a very large block of dielectric with a cubic hole in the middle. The cube is oriented such that P is parallel to one its edges. There are no...
-
If estimate overhead is $500, total allocated overhead for the period was $525 and actual overhead for the period was $510, is overhead over or underapplied and by how much?
-
1. Consider an isolated classical ideal gas with N molecules in a 3 - D box of volume V. Calculate the equilibrium properties of this system using the formalism of a micro- canonical ensemble...
-
The July 31 bank statement for a catering company reported a balance of $15,014. The company's book balance shows $19,960. Two checks written by the company are outstanding, #333 and #336 in the...
-
A 5-m-long section of an air heating system of a house passes through an unheated space in the basement. The cross section of the rectangular duct of the heating system is 20 cm x 25 cm. Hot air...
-
Kenneth Hubbard has prepared the following list of statements about managerial accounting and financial accounting. 1. Financial accounting focuses on providing information to internal users. 2....
-
If credit risk in the banking system increases, all else equal what effect, if at all, will this have on the money multiplier?
-
Compare the monetary base to M1 on the grounds of controllability and measurability. Which do you prefer as an intermediate target? Why?
-
Suppose that many big corporations decide not to issue bonds, since it is now too costly to comply with new financial market regulations. Can you describe the expected effect on interest rates?
-
True or False: Inflation decreases the purchasing power of money.
-
Logan is conducting an economic evaluation under inflation using the then-current approach. If the inflation rate is \(j\) and the real time value of money rate is \(d\), which of the following is...
-
What is a good working definition of inflation in 10 words or less?
Study smarter with the SolutionInn App