ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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- A country has a Cobb-Douglas production function given by: Y = AK0.5H0.1 If total factor productivity is 46, human capital is 1,828, and the capital stock is 2,736, what will this country's GDP be? Do not round until your final answer, when you may round to two decimal places. Country A produces GDP according to the following equation: GDP 5K and has a capital = stock of 13,399. If the country devotes 13% of its GDP to producing or repairing investment goods, how much is this country currently investing? Rounds your answer to two decimal places.arrow_forwardIn year 1, a country has saving rates, s=0.1, productivity a=2 and depreciation rate d=0.1 . In year 2, the same country has s=0.1, a=1, d=0.2 Using the endogenous growth model, find the economy’s growth rate in year 1 and What is the state of the economy in year 1? (Use business cycle words) Using the endogenous growth model, find the economy’s growth rate in year 2.What is the state of the economy in year 2? (Use business cycle words) If in year 1, delta c/c=0.2, delta u /u =-0.1 and in year 2, deltac/c=-0.1, delta u/u =0.15 , describe the variables and using business cycle words Please answer the business cycle explanation part!arrow_forwardDo not type in dollar signs or round any of your answers. Suppose a country's production function is Y = K1/2L1/2. If capital depreciates at the rate of 5 percent each year and the population grows at the rate of 1 percent each year, calculate the savings rate that would lead to a steady-state equilibrium value for capital per worker of 100 machines: savings rate = percent In this steady-state equilibrium, output per worker is and consumption per worker isarrow_forward
- For an open economy, which of the following expressions represents private saving (S)? Group of answer choices investment plus tax revenues less government expenditure plus net exports, I + TG + NX I+T G NX I + G + NX GT+NXI none of the abovearrow_forwardPlease answer all questions.arrow_forwardQ8. Assume a closed economy. Suppose the capital-output ratio is 3, the depreciation rate is 3%, and the gross savings rate is 10%. Use the Harrod-Domar growth equation to determine the rate of growth in total output. What would the gross savings rate have to be to achieve 5% growth? Why is capital the only factor of production in the Harrod-Domar model? Compare the assumptions made about the production function in the Solow model and the Harrdo-Domar model.arrow_forward
- Why do large differences in capital per worker lead to relatively small differences in predicted GDP across countries? Workers exert more effort when they have less capital Capital has a high depreciation rate 4 O The exponent on capital in the production function is much lower than one O Capital is not an input in productionarrow_forwardIf Real GDP in the previous period was $15,840 billion, the economic growth rate is ________% in the current period, rounded to the tenth (one decimal place)arrow_forwardConsider an Economy in steady state, with a Cobb Douglas Production function. They have a savings rate of 45% and a capital share of 2/7. Technological progress is 1%, population growth is 3%, and Depreciation is 5%. 1. Derive the Production function per effective worker and solve for steady state capital, output, and consumption per effective worker. 2. What is MPK in the steady state? Is this country saving too much or too little? How do you know? 3. What should you lower or raise the saving rate to, in order to reach the golden rule steady statearrow_forward
- Consider country A, which is a closed economy. Suppose that A’s private saving is 280 and investment is 250. What is the public saving? Consider country B, which is a closed economy. B’s private saving is 500, its government spending is 100, budget deficit is 50, consumption is 1000. what is the B’s investment and the disposable income, Y – T (Y is the total income, T is tax revenue)?arrow_forwardAn economy consumes 1 million chickens each year. A new technology in raising chickens lowers the price of each chicken from $50 to $40. Suppose the economy still consumes 1 million chickens each year at the lower price. Do you agree that since the consumers pay $10 million less, the national saving due to the change in price equals $10 million?arrow_forwardCountry A produces GDP according to the following equation: GDP = 5√K. The country has a savings rate of 27.6% and 8.8% of capital depreciates every year. What is this country's steady state amount of GDP? Round your final answer to two decimal places.arrow_forward
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