"Consider the simple production model studied in class, but with different exponents. Suppose that t production function is Cobb-Douglas. The exponent on capital is 0.1 and the exponent on labor is 0.9. T data for this economy is A=10, KO=300 and the initial population is LO-30. We will assume that everyone this country works so that population equals employment and per-person GDP equals per-worker GD Now suppose that the country receives foreign aid that is used to invest in infrastructure and elect vehicles. As a result, over the next few years, the economyos capital stock doubles to K1=600. Fortunatell no one is killed during the hurricane. In the Capital market the Demand will and the Supply will M As a result, the rental rate will Shift to the Right; Remain unaffected; Increase Shift to the Left; Remain unaffected; Fall Shift to the Left; Shift to the Right; Fall

ENGR.ECONOMIC ANALYSIS
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ISBN:9780190931919
Author:NEWNAN
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Chapter1: Making Economics Decisions
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"Consider the simple production model studied in class, but with different exponents. Suppose that the
production function is Cobb-Douglas. The exponent on capital is 0.1 and the exponent on labor is 0.9. The
data for this economy is A=10, KO=300 and the initial population is LO-30. We will assume that everyone in
this country works so that population equals employment and per-person GDP equals per-worker GDP.
Now suppose that the country receives foreign aid that is used to invest in infrastructure and electric
vehicles. As a result, over the next few years, the economyos capital stock doubles to K1=600. Fortunately,
no one is killed during the hurricane. In the Capital market the Demand will and the Supply will
As a result, the rental rate will
Shift to the Right; Remain unaffected; Increase
Shift to the Left; Remain unaffected; Fall
Shift to the Left; Shift to the Right; Fall
Remain unaffected; Shift to the Right; Fall
Transcribed Image Text:"Consider the simple production model studied in class, but with different exponents. Suppose that the production function is Cobb-Douglas. The exponent on capital is 0.1 and the exponent on labor is 0.9. The data for this economy is A=10, KO=300 and the initial population is LO-30. We will assume that everyone in this country works so that population equals employment and per-person GDP equals per-worker GDP. Now suppose that the country receives foreign aid that is used to invest in infrastructure and electric vehicles. As a result, over the next few years, the economyos capital stock doubles to K1=600. Fortunately, no one is killed during the hurricane. In the Capital market the Demand will and the Supply will As a result, the rental rate will Shift to the Right; Remain unaffected; Increase Shift to the Left; Remain unaffected; Fall Shift to the Left; Shift to the Right; Fall Remain unaffected; Shift to the Right; Fall
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