ENGR.ECONOMIC ANALYSIS
14th Edition
ISBN: 9780190931919
Author: NEWNAN
Publisher: Oxford University Press
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Question
Draw a graph with the following elements:
- A Solow growth (Y) function where Y= square root of K
- An investment (I) function where I = % * Y
- A
depreciation (D) function where D = % * K
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- Consider the Solow model (Y-AK1/4L3/4). Suppose that the productivity parameter is A=500, the depreciation rate is d=1/10, the savings (investment) rate is s=0.30, and the labor force is constant and equal to 2 million. ÊÊWhat is the steady state capital stock (K)? Please choose the closest answer." a. b. 48200 million C. 34341 million d. 15930 million 18340 millionarrow_forwardAssume the per-worker production function is y = k1/2, depreciation is 4 percent of %3D capital, the labor force grows at 2 percent, and the savings rate is 30 percent. Then, the steady-state equilibrium is achieved when capital per worker is equal to: 2.5. 5. 6.25. 25.arrow_forward9 Based on the production function Y = AKaG1-a (with G representing public expenditure, and the remaining variables and parameters representing usual values), show, using the necessary assumptions the value of the tax amount that maximizes the economic growth rate. Then, represent graphically the situation.arrow_forward
- Consider the basic Solow model with production function Y = K0.25 N0.75, saving rate of 20% and depreciation rate of 10%. Which of the following is true? The saving rate is: less than the golden rule' saving rate, hence the economy is saving too much less than the golden rule' saving rate, hence the economy is saving too little greater than the `golden rule' saving rate, hence the economy is saving too much greater than the `golden rule' saving rate, hence the economy is saving too littlearrow_forwardConsider the Solow model with Cobb-Douglas production function with productivity parameter A, exponents on capital equal to 1/4, and exponent on labor equal to 3/4. Derive the MPL funcion as a function of K, L and constant A Note: xa is the same as x power a O (3/4) A(K/L) 0.25 O(1/4) A(L/KY0.76 O (1/4) A(KML)+0.75 O (3/4) A(UK) 0 25arrow_forward4. If the production function is given by Y=K2L'3 and the saving rate saving rate (s) equals the depreciation rate (8). Find the numerical values of the steady state capital and output?arrow_forward
- Q4) Production Functions and Growth (a) Time is continuous and the production function of the economy is given by (1) Y¢ = ( K¢ )ª( A¿N; )1-« Total factor productivity evolves according to (2) A = egt Ao such that A where the growth rate of technological progress g is exogenous. Population grows at an exogenous rate n according to (3) N{ = ent No with No = 1 such that = n Find an expression for the growth rate of (i) output per capita (Yt / Ni) and (ii) output per effective worker ( Yt/ (A:N:) ). When is the growth rate of (ii) equal to zero?arrow_forward1) Production function for agricultural sector of a country is specified as the following, log Y=B1 + B2 log K+ ß3 log L+u. where Y represents wheat output, K capital stock and L employment (labor). The model is estimated using annual data over 1980-2020 (n=41) periods. The results are reported below. p-values are given in squared parentheses. loĝ Y = 4.17 +0.67 log K+ 0.35 log L p-value [0.015] [0.18] R² = 0.81 1.a) Test if each slope coefficient is significant individually (one by one) using the p-values in parentheses and interpret the results. (arrow_forwardConsider an economy that exhibits both population growth (L grows at rate n) and technological progress (A grows at rate a) described by the production function, Y = F(K,AL) = Kª(AL)¹-α| Here K is capital and Y is output. (a) Show that this production function exhibits constant returns to scale. What is the per-effective-worker production function? (c) Find expressions for the steady-state capital-output ratio, capital stock per effective worker, and output per effective worker, as a function of the saving rate (s), the depreciation rate (8), the population growth rate (n), the rate of technological progress (a), and the coefficient a. (You may assume the condition that capital per effective worker evolves according to Ak = sf (k) − (a +n+8)k.) (d) Show that at the Golden Rule steady state the saving rate for this economy is equal to the parameter a.arrow_forward
- 6arrow_forwardThe productivity of a country is given by f(x,y)=15.21x0.438y0.562, where x is the amount of labor and y is the amount of capital. (A) Find fx(x,y) and fy(x,y). (B) Find fx(67,55) and fy(67,55), and interpret the results.arrow_forwardI need assitance with part b) and d) answers are provided and arecorrect.arrow_forward
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