5. Consider the Solow growth model with no population growth and no tech- nology growth, i.e., n = x = 0. Output is created by a Cobb-Douglas pro- duction function combining Labor, Lt, and capital, Kt, such that output Yt is given by Y₁ = At Ko La = = = 2. Ao and assume Recall that, without population growth, L₁ = Lo and assume that Lo Furthermore, recall that, without technology growth, At that Ao = 1. Assume that the savings rate is s rate is 8: 0.15, and that the capital share is a = letter denotes a variable in per capita. For example, kt = 0.4, the depreciation 0.3. A lower case = Kt/Lt. In the following questions, choose the closest number. What is the value of kss? (a) 40.6 (b) 4.1 (c) 2.8 (d) 28 6. What is the value of Ys for the economy described in Question 5 (a) 30.5 (b) 1.03 (c) 3.05 (d) 10.3 9. Now consider growth, Suppose that x = 0.05 and that n = 0.03, i.e., A₁ = (1+0.05) At−1, and L₁ = (1 + 0.03) Lt−1· The other parameters are same as in Question 5. what is capital per efficiency units in steady state? (a) 1.91 (b) 2.03 (c) 1.3 (d) 1.05 10. The capital share in Mexico is a = 1/3. Relative to last year, output increased by 20%, capital increased by 10%, and total factor productivitity increased by 5%. Which is the closest approximation for the growth in the labor force, L? (a) -3% (b) 10% c) 17.5% (d) 0%
5. Consider the Solow growth model with no population growth and no tech- nology growth, i.e., n = x = 0. Output is created by a Cobb-Douglas pro- duction function combining Labor, Lt, and capital, Kt, such that output Yt is given by Y₁ = At Ko La = = = 2. Ao and assume Recall that, without population growth, L₁ = Lo and assume that Lo Furthermore, recall that, without technology growth, At that Ao = 1. Assume that the savings rate is s rate is 8: 0.15, and that the capital share is a = letter denotes a variable in per capita. For example, kt = 0.4, the depreciation 0.3. A lower case = Kt/Lt. In the following questions, choose the closest number. What is the value of kss? (a) 40.6 (b) 4.1 (c) 2.8 (d) 28 6. What is the value of Ys for the economy described in Question 5 (a) 30.5 (b) 1.03 (c) 3.05 (d) 10.3 9. Now consider growth, Suppose that x = 0.05 and that n = 0.03, i.e., A₁ = (1+0.05) At−1, and L₁ = (1 + 0.03) Lt−1· The other parameters are same as in Question 5. what is capital per efficiency units in steady state? (a) 1.91 (b) 2.03 (c) 1.3 (d) 1.05 10. The capital share in Mexico is a = 1/3. Relative to last year, output increased by 20%, capital increased by 10%, and total factor productivitity increased by 5%. Which is the closest approximation for the growth in the labor force, L? (a) -3% (b) 10% c) 17.5% (d) 0%
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
Related questions
Question
Transcribed Image Text:5. Consider the Solow growth model with no population growth and no tech-
nology growth, i.e., n = x = 0. Output is created by a Cobb-Douglas pro-
duction function combining Labor, Lt, and capital, Kt, such that output
Yt is given by
Y₁ = At Ko La
=
=
=
2.
Ao and assume
Recall that, without population growth, L₁ = Lo and assume that Lo
Furthermore, recall that, without technology growth, At
that Ao = 1. Assume that the savings rate is s
rate is 8: 0.15, and that the capital share is a =
letter denotes a variable in per capita. For example, kt
=
0.4, the depreciation
0.3. A lower case
=
Kt/Lt. In the
following questions, choose the closest number. What is the value of kss?
(a) 40.6
(b) 4.1
(c) 2.8
(d) 28
6. What is the value of Ys for the economy described in Question 5
(a) 30.5
(b) 1.03
(c) 3.05
(d) 10.3
Transcribed Image Text:9. Now consider growth, Suppose that x =
0.05 and that n =
0.03, i.e.,
A₁ = (1+0.05) At−1, and L₁ = (1 + 0.03) Lt−1·
The other parameters are same as in Question 5. what is capital per
efficiency units in steady state?
(a) 1.91
(b) 2.03
(c) 1.3
(d) 1.05
10. The capital share in Mexico is a = 1/3. Relative to last year, output
increased by 20%, capital increased by 10%, and total factor productivitity
increased by 5%. Which is the closest approximation for the growth in
the labor force, L?
(a) -3%
(b) 10%
c) 17.5%
(d) 0%
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