Microeconomics
21st Edition
ISBN: 9781259915727
Author: Campbell R. McConnell, Stanley L. Brue, Sean Masaki Flynn Dr.
Publisher: McGraw-Hill Education
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Question
Chapter 25, Problem 2DQ
To determine
Migration.
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Students have asked these similar questions
In PPP terms, GDP per capita in Country A is 3 times higher than in
dollar terms. This means that if a US firm employs workers in Country
A at $5 per hour, this would give the the workers in Country A a
purchasing power equivalent to a wage of $15 per hour in the USA.
Select one:
O True
O False
"Consider the simple production model studied in class, but with different exponents. Suppose that the
production function is Cobb-Douglas. The exponent on capital is 0.1 and the exponent on labor is 0.9. The
data for this economy is A=10, K0-300 and the initial population is LO-30. We will assume that everyone in
this country works so that population equals employment and per-person GDP equals per-worker GDP.
Now suppose that the country receives foreign aid that is used to invest in infrastructure and electric
vehicles. As a result, over the next few years, the economyos capital stock doubles to K1=600. Fortunately,
no one is killed during the hurricane. In the initial final equilibrium, per-worker GDP will be..."
Between 12.3% and 14.4% higher than in the initial equilibrium.
Between 7.0% and 8.0% higher than in the initial equilibrium.
Between 4.4% and 6.6% lower than in the initial equilibrium.
None of the above.
"Consider the simple production model studied in class, but with different exponents. Suppose that the
production function is Cobb-Douglas. The exponent on capital is 0.1 and the exponent on labor is 0.9. The
data for this economy is A=10, KO=300 and the initial population is LO-30. We will assume that everyone in
this country works so that population equals employment and per-person GDP equals per-worker GDP.
Now suppose that the country receives foreign aid that is used to invest in infrastructure and electric
vehicles. As a result, over the next few years, the economyos capital stock doubles to K1=600. Fortunately,
no one is killed during the hurricane. In the Capital market the Demand will and the Supply will
As a result, the rental rate will
Shift to the Right; Remain unaffected; Increase
Shift to the Left; Remain unaffected; Fall
Shift to the Left; Shift to the Right; Fall
Remain unaffected; Shift to the Right; Fall
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- Suppose that Mexico has previously had restrictions on inflows of foreign direct investment from all sources, including the United States. Then suppose that they remove those restrictions on flows from the United States in a particular industry, say sweatshirts. As a result, several sweatshirt producers in the US move production to Mexico via FDI. Indicate for each of the groups below whether you expect them to gain or to lose from this flow of investment: Workers previously employed in sweatshirt production in the US. Group of answer choices Lose Gain Unchangedarrow_forwardP F Q1 Suppose that the wage ratio of skilled labor v.s. unskilled labor, wH/wL, is lower at home than at the foreign country and that production involves four stages/tasks, namely, R&D, marketing, components, and assembly ordered from the most skill intensive to the least skill intensive. Now consider a decrease in trade costs for shipping components and final goods between the two countries. Use a relative skilled-labor demand- and supply-curve graph to show the effect of lower trade costs on home country’s wH/w Use another relative skilled-labor demand- and supply-curve graph to show the effect of lower trade costs on foreign country’s wH/w Your answer:arrow_forwardQuestion I - Solow Model without Population or Technology Growth Consider the Solow growth model with no population growth and no technology growth, i.e., n = x = 0. Output is created by a Cobb-Douglas production function combining Labor, Lt, and capital, Kt, such that output Yt is given by Y₁ = A+ KL 1-α = = Recall that, without population growth, Lt Lo and assume that Lo 1. Furthermore, recall that, without technology growth, At Ao and assume that A0 = 1. The law of motion for capital per worker is = kt+1 = (1 − 6) kt + sAtko. (1) Assume that the savings rate is s = 0.2, the depreciation rate is 8 = 0.1, and that the capital share is a = 0.3. 1. Use equation (1) to solve for the steady state level of capital, kss, (hint, replace kss in that equation on both sides) kss = What is the steady state level of capital? (Replace the numbers in the expression) = 2. Suppose that this economy starts with ko 1. Does capital grow or fall over time? What is the maximum level of capital per capita…arrow_forward
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