6. Study Questions and Problems #6Complete the following sentences to explain why it is so difficult for poor LDCs to generate investment in capital in order to increase productivity andgrowth and, therefore, improve their standard of living.It is difficult for poor LDCs to generate investment in capital in order to increase productivity and growth because their savings rate isleads torates of investment, and many wealthy individuals in poor LDCs choose to save their money inA. This 6. Study Questions and Problems #6Complete the following sentences to explain why it is so difficult for poor LDCs to generate investment in capital in order to increase pgrowth and, therefore, improve their standard of living.It is difficult for poor LDCs to generate investment in capital in order to increase productivity and growth because their savings rate isleads to rates of investment, and many wealthy individuals in poor LDCs choose to save their money inlowity andhighThis

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ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

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6.5 Exercises Exercise 6.1 (Technological Progress and Long-Run Growth). Consider a Solow economy with population growth and technological progress. The evolution of the capital stock per efficiency unit of labor, denoted k1, is given by the law of motion (1+n)(1+ g)kt+1 = (1 – 8)kt +of(kt). Capital per efficiency unit of labor is defined as k, = Kt/(LEt), where Kt denotes the stock of physical capital, L, denotes population, and E is a tech- nological factor. Population grows at the rate n and the technological factor grows at the rate g. The subscript t denotes time, measured in years. The parameters d E (0, 1) and o > 0 denote, respectively, the depreciation rate of capital and the savings rate. The function f(k;) represents the produc- tion technology. Specifically, let Y, denote output and yt = Yt/(LEt) denote output per efficiency unit of labor. Then yt = f(kt). Assume that f(kt) = /k. 1. Find the steady-state stock of capital per efficiency unit of labor, de- noted k*, as a…
QUESTION 1 Assume a Cobb-Douglas production with capital share 1/3; total factor productivity equal to 1, total population in an economy is equal to 1, depreciation rate is 5 percent and saving rate is 10 percent. Then the steady-state level of capital is about: a. 0.8 b. 1.6 c.1.3 d.2.8 e. 0.3Question 2 If a natural disaster destroys a large portion of a country's capital stock but the saving and depreciation rates are unchanged, the Solow model predicts that the economy will grow and eventually reach:a. A lower steady-state level of output than it would have before the disasterb. None of these answers is correctC. The same steady-state level of output as it would have before the disasterd. A higher steady-state level of output than it would have before the disaster e. Not enough information is given QUESTION 3 Suppose you are given the data for Brazil and Portugal. In Brazil, the saving rate is 0.1 and the depreciation rate is 0.1, while in Portugal saving rate is 0.2 and the…
56. Which of the following is a cost of economic growth? improvements in technology current saving must be sacrificed to increase investment in capital goods the effect on workers whose skills are made obsolete by technical change reduced interest rates declining future living standards
1. Assume that there are two countries with the following characteristics. Per capita Output Y = A.kª.h¹-a A-technology k-per capita physical capital h-per capita human capital a-0.6 Country A with $500 per capita income saves 25% of its output and invests on physical capital, and 25% on investing in human capital. Country B with $5000 per capita income saves 25% of its output and invests on physical capital, and 35% on investing in human capital. a. What are the growth rates of the two countries? b. What will be the per capita income levels after 5 years? c. Will there be convergence on the per capita income in the future?
Question 7 What is meant by economic growth and why is it one of the most important goals macroeconomists seek to achieve? In your explanation, show the relationship between production, consumption, and investment in periods of economic growth?
1
71.Improvements in nutrition and health care typically increase life expectancies and decrease mortality rates , but don't increase the rate of population growth . T F
Can you please help me?
16 Calculate the implied growth rate of technology in each scenario. Assume labor's share of output is 60% and capital's share of output is 40%. Instructions: Enter numbers rounded to two decimal place in each box. Growth Rate of Labor (8) Growth Rate of Capital (8) Scenario A B C D Growth Rate of Output (8) 3.0 4.2 3.0 4.2 2 3 2 1 2 3 1 4 Implied Growth Rate of Technology (8)

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