2 Compute per-capita real GDP in year 2 in the two islands. Pick the closest values.O In East Land it is between 20.75 and 21.50 units of output. In West Land it is higher.In East Land it is between 16.35 and 16.94 units of output. In West Land it is higherNone of the other optionsO In East Land it is between 21.75 and 22.25 units of output. In West Land it is lower.Suppose the annual cost of the STEM subsidy is 0.5 units of output per person.Can the West Land government justify the subsidy on the basis of the per-capitaincome gains during years 1 and 2?O None of the other options.Yes. The cumulative net gain, adding the two years, is larger than 2.5 units of outputper person,Yes. The cumulative net gain, adding the two years, is larger than 4.5 units of outputper person.O No. The cumulative net gain, adding the two years, is exactly zero.O No. The cumulative net gain, adding the two years, is negative. Problem 2Consider two island countries: East Land (EL) and West Land (WL). The economies of these islandsbehave like the Romer model. The two islands are far apart and neither ideas nor people travel from one tothe otherIn the initial year (t-0) the two islands are identical in terms of all parameter values: initial knowledge levelAD-20, research productivity z-1/500, workforce equal to 500 and 5% of the workforce employed inresearch and development. Assume that the population equals the workforce.In year te1, West Land decides to introduce a subsidy to STEM (Science, Technology, Engineering andMath) by providing free college tuition to students majoring in STEM fields. As a result, the share of theworkforce doing RSD in West Land rises to 10%. In contrast, East Land does not adopt the subsidy. Use 2decimals in your calculations.Compute the innovation rate (i.e. annual growth rate in knowledge) in the twoislands. Which of the following is correct?O The innovation rate in East Land is 5% and in West Land 10%.The innovation rate in East Land is between 8 and 12% and in West Land it is exactly22%O None of the other optionsThe innovation rate in East Land is 3.4% and in West Land between 11% and 12%Compute per-capita real GDP in year 1 in the two islands. Pick the closest values.In East Land it is between 19.90 and 20.00 units of output. In West Land it is lowerthan in East Land.In East Land it is between 12.20 and 13.00 units of output. In West Land it is higherthan in East Land.In East Land it is between 27.30 and 28.00 units of output. In West Land it is lowerthan in East Land.O None of the other options

The following formula can be used to determine the innovation rate for the Romer model:Where:g is…

Compute per-capita real GDP in year 2 in the two islands. Pick the closest values. In East Land it is between 20.75 and 21.50 units of output. In West Land it is higher. In East Land it is between 16.35 and 16.94 units of output. In West Land it is higher None of the other options In East Land it is between 21.75 and 22.25 units of output. In West Land it is lower.

Compute per-capita real GDP in year 2 in the two islands. Pick the closest values. In East Land it is between 20.75 and 21.50 units of output. In West Land it is higher. In East Land it is between 16.35 and 16.94 units of output. In West Land it is higher None of the other options In East Land it is between 21.75 and 22.25 units of output. In West Land it is lower.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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