Consider that Country X is operating along its balanced growth path and producing a composite commodity (Y). Commodity Y is a production function of factor inputs capital (K), labor (N), as well as the given state of technology (A) of the following form. Y= K• AN For a particular year, the level of capital (K) was 1,000 and the level of effective labor (AN) was 1,250. In the same year, the saving rate was 15%, the depreciation applicable on capital was 12%, and the number of workers grew by 2%. If Country X wants to continue along its growth path, the required rate of technological progress it needs to achieve is%. (Round your response to two decimal places.) If the country's aim was to keep its capital stock constant, without considering the effects of a growing work force in the economy, will be the investment towards capital required by Country X. Suppose the growth rate of the number of workers falls by 30%, but the rate of technological progress remains unchanged. What is the effect on the growth rate of output and the standard of living of the workers? O A. The growth rate of output and the standard of living of the workers fall by 30% each. O B. The growth rates of output and the standard of living remain unchanged. OC. The growth rate of output falls by 12.58% and the change in standard of living is unaffected. O D. The growth rate of output falls by 12.58% and the standard of living falls 30%.
Consider that Country X is operating along its balanced growth path and producing a composite commodity (Y). Commodity Y is a production function of factor inputs capital (K), labor (N), as well as the given state of technology (A) of the following form. Y= K• AN For a particular year, the level of capital (K) was 1,000 and the level of effective labor (AN) was 1,250. In the same year, the saving rate was 15%, the depreciation applicable on capital was 12%, and the number of workers grew by 2%. If Country X wants to continue along its growth path, the required rate of technological progress it needs to achieve is%. (Round your response to two decimal places.) If the country's aim was to keep its capital stock constant, without considering the effects of a growing work force in the economy, will be the investment towards capital required by Country X. Suppose the growth rate of the number of workers falls by 30%, but the rate of technological progress remains unchanged. What is the effect on the growth rate of output and the standard of living of the workers? O A. The growth rate of output and the standard of living of the workers fall by 30% each. O B. The growth rates of output and the standard of living remain unchanged. OC. The growth rate of output falls by 12.58% and the change in standard of living is unaffected. O D. The growth rate of output falls by 12.58% and the standard of living falls 30%.
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Transcribed Image Text:Consider that Country X is operating along its balanced growth path and producing a composite commodity (Y). Commodity Y is a production function of factor
inputs capital (K)., labor (N), as well as the given state of technology (A) of the following form.
Y= K• AN
For a particular year, the level of capital (K) was 1,000 and the level of effective labor (AN) was 1,250. In the same year, the saving rate was 15%, the depreciation
applicable on capital was 12%, and the number of workers grew by 2%.
If Country X wants to continue along its growth path, the required rate of technological progress it needs to achieve is %.
(Round your response to two decimal places.)
If the country's aim was to keep its capital stock constant, without considering the effects of a growing work force in the economy,
will be the investment
towards capital required by Country X.
Suppose the growth rate of the number of workers falls by 30%, but the rate of technological progress remains unchanged. What is the effect on the growth rate of
output and the standard of living of the workers?
O A. The growth rate of output and the standard of living of the workers fall by 30% each.
O B. The growth rates of output and the standard of living remain unchanged.
O C. The growth rate of output falls by 12.58% and the change in standard of living is unaffected.
O D. The growth rate of output falls by 12.58% and the standard of living falls 30%.
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