Consider a countries Am-This question is about the Solow growth model Sbrosia and Burunda. Ambrosia's GDP per worker is 1.96 times that of Burunda. The ratioof investment to output is 0.35 in Ambrosia, and in Burunda it is 0.25. Labour supply isconstant over time in both countries. So is total factor productivity (TFP). Assume bothcountries are in their respective steady states.Suppose output in each country i = A, B is produced according toYt = A,KGLawhere Y; is output for country i at time t, A, is TFP for country i, Ką is capital stock incountry i at time t, and Li is labor in country i. Capital is accumulated according toAKit+1 = 5;Yit – dK#Assume that the depreciation rate and the capital share are same across two countries.(a) Derive an expression for the steady state value of output per worker (Y/L) in eachcountry i in terms of AA, 5A, d and a for country A, and in terms of AB, SB, d and afor country B. (b) Suppose a = 1/3. What must be the ratio of TFP in country A to TFP in countryB (i.e. AA/AB) in order to fit the facts noted at the beginning of the question.i jAssume that the depreciation rate and the capital share are same across twocouïtries.](c) Assume TFP is equal across the two countries. If Burunda increases its savings rateto 0.35, what will be the ratio of output ner worker (Y/L) in Ambrosia relative toBurunda in the new steady state? ( y [Assume that the depreciation rate andthe capital share are same across two countries.]1010(d) Using a Solow diagram, show the effect of an increase in savings rate in country B oncapital per worker. r[Hint: you do not necgr to plot variables for country A in your answer]

Given Information,There are two countries: Ambrosia & BurundaYa/La = 1.96* Yb/Lb…

Consider a countries Am- This question is about the Solow growth model f brosia and Burunda. Ambrosia's GDP per worker is 1.96 times that of Burunda. The ratio of investment to output is 0.35 in Ambrosia, and in Burunda it is 0.25. Labour supply is constant over time in both countries. So is total factor productivity (TFP). Assume both countries are in their respective steady states. Suppose output in each country i = A, B is produced according to Yit = A,KL-a where Y is output for country i at time t, A, is TFP for country i, Kit is capital stock in country i at time t, and L, is labor in country i. Capital is accumulated according to AKit+1=8iYit-dKit Assume that the depreciation rate and the capital share are same across two countries

Consider a countries Am- This question is about the Solow growth model f brosia and Burunda. Ambrosia's GDP per worker is 1.96 times that of Burunda. The ratio of investment to output is 0.35 in Ambrosia, and in Burunda it is 0.25. Labour supply is constant over time in both countries. So is total factor productivity (TFP). Assume both countries are in their respective steady states. Suppose output in each country i = A, B is produced according to Yit = A,KL-a where Y is output for country i at time t, A, is TFP for country i, Kit is capital stock in country i at time t, and L, is labor in country i. Capital is accumulated according to AKit+1=8iYit-dKit Assume that the depreciation rate and the capital share are same across two countries

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

See similar textbooks

Similar questions

BA Explain explicitly the immiserizing growth which takes part within the economic growth and international trade analysis.
P3
Chapter 8: Economic growth I: Capital Accumulation and Population Growth Question: In the Solow growth model, the steady state level of output per worker would be greater if the .. .. rate rose or the ....... rate declined. ..... ..... Lütfen birini seçin: O a. depreciation / population growth b. population growth /saving saving; depreciation d. population growth/ depreciation population growth / saving
[Use a diagram to answer these questions] Be sure to label the: a. axes; b. curves; c. initial steady-state levels; d. terminal steady-state levels; e. the direction curves shift. Suppose a government is able to impose controls that limit the number of children people can have. Use the Solow growth model to graphically illustrate the impact of the slower rate of population growth on the steady-state capital-labor ratio and the steady-state level of output per worker.
Suppose that , the marginal product of efficiency units of labor, increases in the endogenous growth model. What effects does this have on the rates of growth and the levels of human capital, consumption, and output? Explain your results.
Consider the following numerical examples for the Solow Growth Model: Economy A z=1 s=0.5 F(K,N)=K0.3N0.7 n=0.01 d=0.1 Economy B z=1 s=0.2 F(K,N)=K0.3N0.7 n=0.01 d=0.1 In which economy is GDP per capita higher in steady state? O Economy A O Economy B O Not enough Information
In the Solow growth model with technological progress, explain carefully what happens if the labour force growth rate suddenly decreases (for instance because of an ageing population in the country)? Use a figure to illustrate your answer!
Consider our graph of the basic Solow growth model. On the graph above: y represents real output (or income) per worker; y=F(k) is the production function; k is the capital stock per worker; s is the savings rate; δ is the rate of depreciation of capital; ‘i’ represents business investment (purchases of capital) per worker); ‘LF’ stands for Loanable Funds. (For purposed of intuition, think of capital as ‘machines.’) If we started out with a capital (per worker) stock lower than the steady-state stock ( , above), we would expect to see which of the following happen over time? Group of answer choices A) Positive growth rates while the capital stock increases. B) Negative growth rates while the capital stock increases. C) Negative growth rates while the capital stock decreases. D) Positive growth rates while the capital stock stays less than the steady-state level. E) Positive growth rates while the capital stock decreases.
Discuss the methods and factors than can help to improve economic growth?
. This part considers a modified version of the Solow growth model. Suppose the production function is given by F(K,bN) = K°(bN)1-a where b is the labour augmenting technology, which grows at a rate f, i.e., b+1 = (1+ f)b. For simplicity, assume that the total factor productivity z = 1, and the population is constant, i.e., N, = N for all t. The rest of the model is the same as in the standard Solow model in the textbook. Especially, the aggregate capital stock evolves according to Kt+1 = I4 + (1 – d)Kt. And assume that the economy is still closed, and there is no government. For any aggregate variable X, let the lower case letter a be the variable per effective unit of worker; that is a = *. Show that the production technology specified above satisfies the assumption of con- stant returns to scale.
Our simple growth model implies that Select one: a.countries with higher K/L ratios will have higher economic growth. b.increases in K/L increase Y/L but at a diminishing rate. c.capital has no impact on Y/L. d.there is little prospect of poor countries catching up with rich countries. In the past few years, several high profile celebrities have campaigned for debt relief for HIPC's (Highly Indebted Poor Countries). While debt relief can potentially play a useful role in poverty reduction there are also some possible downsides such as Select one: a.reducing a poor nations exports. b.increasing government deficits. c.encouraging further debt by setting up an expectation that future debts will also be forgiven. d.under cutting local markets for food and other commodities given as aid.