(d) Using Growth Accounting equations derive the selow Residual.

The Big Mac Index! We discussed the concept of Purchasing Power Parity (PPP) in class. This used the prices of representative bundles of goods to convert GDP and GDP per capita values from local currencies to dollars. The Economist magazine began the practice of using the prices of Big Mac's to make the conversion. You are going to do this now! Here is some evidence from the year 2007 (US GDP reported in trillions of US dollars. China GDP reported in trillions of Chinese Yuan.): GDP Big Mac Price US 14.5 $4.07 China 20 14.70 CNY (a) Suppose China used all its GDP to buy Big Macs (in China). How many big macs could they purchase (report your answer in trillions of big macs)? Round your final answer to one decimal place. (b) Using your answer from Part (a), compute the US dollar value of these big macs in the U.S.

A newly appointed Minister of Finance is to effectively stimulate the economy within 3 months. He then asks his group of advisors about it and they come up with 3 projects as follows: A. A money transfers of 3,000 THB per month for 3 months to unemployed people; B. Provide attractive co-payment (30% paid by government and 70% paid by travelers) travel packages for tourists to travel within the country for the period of 3 months; C. Build bridges, roads and small dams for a total of 1,000 projects with an emphasis on hiring local people and these projects are to be completed within a 3-months period. The Minister of Finance then contacts the Budget Bureau for the money to do these projects. The Budget Bureau tells him that there is enough money to do only 1 project. The Minister does not sure which project to choose so he turns to you for advice. His questions to you are 1. Which one of the 3 projects should he implements? Explain 2. Why the other 2 projects are not to be implemented?…

2) Consider an economy with depreciation 6=.2, saving rate s = .1. Worker productivity grows at rate g = .1. The economy starts with 5 units of capital per worker. The productivity function is given by: 2tnioq S) m6x9 grit no bazzim 23 0 2 2 19 0 f(k) = 3* k1/3 (1916978 zi 19verlɔirlw how to two lapiolandotdwong noitsluqoq TUOHTIW lebom wolo2011 ( The Marginal Product of capital is therefore 100037950 1 ritwong ytivitoub 1910 190 stign .6 MPK = 3* know 19q gniv brs (19) a. Using the above parameters, what is the golden rule steady state capital per (effective) worker? Please show your work below.