Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Question
Chapter 4, Problem 2AP
a)
To determine
To find the effect of war on the country’s current employment, output, and real wage.
b)
To determine
The effect of loss of capital on desired investment.
c)
To determine
The effect of loss of capital on real interest rate and investment.
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Suppose the U.S. has an investment opportunity which costs $200 which will increase output from 100
to 110 per quarter. The investment would take effect after t = 0. What is the marginal product of
capital (MPK)? What is the difference in the present value of future income in the U.S. of undertaking
the investment if the real world interest rate is 8%? Should the U.S. borrow from abroad to fund the
investment and why?
Suppose the U.S. has an investment opportunity which costs $200 which will increase output from 100
to 110 per quarter. The investment would take effect after t = 0. What is the marginal product of
capital (MPK)? What is the difference in the present value of future income in the U.S. of undertaking
the investment if the real world interest rate is 8%? Should the U.S. borrow from abroad to fund the
investment and why?
TYPO*. Increased output from 100 to 110 per YEAR
(not quarter).
Assume that a country experiences a permanent increase in its saving rate. Which of the following will occur as a result of this increase in the saving rate?
Chapter 4 Solutions
Macroeconomics
Ch. 4 - Prob. 1RQCh. 4 - Prob. 2RQCh. 4 - Prob. 3RQCh. 4 - Prob. 4RQCh. 4 - Prob. 5RQCh. 4 - Prob. 6RQCh. 4 - Prob. 7RQCh. 4 - Prob. 8RQCh. 4 - Prob. 9RQCh. 4 - Prob. 10RQ
Ch. 4 - Prob. 1NPCh. 4 - Prob. 2NPCh. 4 - Prob. 3NPCh. 4 - Prob. 4NPCh. 4 - Prob. 5NPCh. 4 - Prob. 6NPCh. 4 - Prob. 7NPCh. 4 - Prob. 8NPCh. 4 - Prob. 9NPCh. 4 - Prob. 1APCh. 4 - Prob. 2APCh. 4 - Prob. 3APCh. 4 - Prob. 4APCh. 4 - Prob. 5APCh. 4 - Prob. 6APCh. 4 - Prob. 7APCh. 4 - Prob. 5WWMDCh. 4 - Prob. 6WWMD
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