Assume an economy were characterized by the following equations C = C + bYD I= Ï - di G=G T= T X=X IM= Z + fY MD= a + Bi + yY MS= P = 1 (1) (2) (3) (4) (7) (8) (9) where the notation denoting parameters YD denotes disposable income. We assume that 0

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Assume that the production function for a country is given by Y=√K and annual investment is given by the function I=γ×YI where γ=0.280, and that the yearly depreciation rate is 4.67%. Suppose that this year, the output in the country is 1, and a neighbor country's output is 50% higher. Calculate the time it would take for the country's output to catch up with its neighbor's output. Assume the neighbor country's economy is neither growing nor shrinking.

51) In the absence of technological progress, we know with certainty that an decrease in the saving rate will cause which of the following? A) decrease steady state consumption B) increase steady state consumption C) have no effect on steady state consumption D) decrease steady state consumption only if the decrease in saving exceeds the increase in depreciation E) decrease steady state consumption only if the decrease in saving is less than the decrease in depreciation 52) As an economy adjusts to an decrease in the saving rate, we would expect output per worker A) to decrease at a constant rate and continue decreasing at that rate in the steady state. B) to decrease at a permanently higher rate. C) to increase at a permanently higher rate. D) to return to its original level. E) none of the above 53) Suppose the following situation exists for an economy: Kt+1/N t/N. Given this information, we know that A) saving per worker equals depreciation per worker…

The formula for economic impact is I(r)=(A)/1-r The formula for impact change is ∆I= I'(r)*∆r The formula for percentage change is g(r)=(r)/1-r

Why is consumption spending insufficient to explain economic growth and rising standards of living?

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a) A planner in a small, open economy has a utility function U = x1X2 and production takes place according to the production functions Y1 = 10L, – 0.5L Y2 = 10L2 – L The world prices of the goods are p1 10 and p2 5. The total amount of labour %| %3D available in the economy is 5 units. (i) Formulate the Lagrange equation. (ii) Write down the Karush-Khun-Tucker conditions. (iii) Determine a possible solution.

Given a closed economy where there is no public sector. Production in the economy can be described with the following production function: Y = F (K, AL) = Kα(AL)1−α  where Y is the productive capacity of the economy, K is the capital stock, L is the labor force, and A is knowledge. Think of AL as a single factor of production where knowledge and the amount of labor are multiplied together. Let's call the multiplier (ie AL) the efficiency of labor. Given that A = 1.5 and saving is a fixed rate of the production, or s = 33%. The capital stock shrinks by 3% per year, while the population grows is nobody Finally, α = 0.4. Answer the following questions based on the above criteria. (a) Show mathematically that the marginal productivity of labor and capital is positive but diminishing. Explain in words and with a picture what the term positive but diminishing marginal productivity means. (b) Show mathematically that saving and investment are equivalent in a closed economy (c) Show…

Use the attached graph .. which of the following can cause the relationship shown between MSC and MPC? a) an increase in cases of asthma due to pollution b) a decrease in financial instability from unlawful investing c) a increase in investment to support educational funding. d) a decrease in air pollution caused by a nuclear energy plant e)an increase in research and development funding of a product