Start Preparing for the First Midterm 4. Consider the following growth Model (C) N₂c₂ = (1-s)Y, (Y) Y₂ = AK N-8 (K) K+1=(1-8) K +SV (N) N₂+1 = N₂(1 + YN) P₁ (P) Pt+1= 1+YK The new element in this model is that the price of capital falls each period by rate yx. The idea is that each period one unit of output saved can be converted into a greater quantity of physical capital because improvements in the technology for producing machines. For example, in 2010 one unit of output saved could be converted into one machine, but in 2020 that same unit of output saved could be converted into 2 machines. b. a. Take the Aggregate representation above and convert it into its per capita representation. Do we have a Steady State or Balanced growth path for this model? Specifically, solve for the growth rate of per capita output, per capita capital, the price of capital, the wage rate and the rental price of capital along the balanced growth path/steady state.

Start Preparing for the First Midterm 4. Consider the following growth Model (C) N₂c₂ = (1-s)Y, (Y) Y₂ = AK N-8 (K) K+1=(1-8) K +SV (N) N₂+1 = N₂(1 + YN) P₁ (P) Pt+1= 1+YK The new element in this model is that the price of capital falls each period by rate yx. The idea is that each period one unit of output saved can be converted into a greater quantity of physical capital because improvements in the technology for producing machines. For example, in 2010 one unit of output saved could be converted into one machine, but in 2020 that same unit of output saved could be converted into 2 machines. b. a. Take the Aggregate representation above and convert it into its per capita representation. Do we have a Steady State or Balanced growth path for this model? Specifically, solve for the growth rate of per capita output, per capita capital, the price of capital, the wage rate and the rental price of capital along the balanced growth path/steady state.

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Consider the following growth model for technology: 8=04 (5,L) Explain for each of the cases technical level (4) and the technical growth rate develop over time if we assumes that the supply of laborforce to research (L, =s,L) and<1 how output from the research sector the is constant/fixed.
6. The constant returns to scale assumption in the endogenous growth model implies that: A) countries will definitely reach a steady-state equilibrium. B) if there are constant returns to one input alone, there will be increasing returns to scale to all factors of production taken together. C) the production function will have a concave shape. D) the production function will have a convex shape. E) the capital-labour ratio will be constant at the steady-state. 7. In the AD-AS model, in the long-run, a decrease in the real money supply: A) will result in a movement along a horizontal AS curve. B) may be the result of equilibrium prices decreasing following a contractionary fiscal policy. C) causes the actual unemployment rate to fall below the natural rate of unemployment. D) is caused by a decrease in the interest rate. E) decreases consumers’ disposable income. 8. Decreasing government expenditure is effective at: A) increasing the level of output in the short-run,…
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1) The depreciation rate of capital in the US is 8 = 0.043 and the population growth rate is g₁ = 0.007. Moreover, Y/K is around 0.35 on average over the last 60 years in the US (see the graph below). If the saving rate is s = 0.2 in the US, then find the long-run growth rate of average income in the US according to the Solow's model. (Note: To cross-check Compare your theoretical result with the actual growth rate of average income in the US which is 2%.) 0,43 0,41 0,39 0,37 0,35 0,33 0,31 0,29 0,27 0,25 1950 1953 1956 1959 1962 1965 Y/K in the US 1968 1971 1974 1977 1980 1983 1986 1989 1992 1995 1998 2001 2004 2007 2010
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The answer should be step by step and the answer should be no plagiarism.