Macroeconomics
10th Edition
ISBN: 9780134896441
Author: ABEL, Andrew B., BERNANKE, Ben, CROUSHORE, Dean Darrell
Publisher: PEARSON
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Question
Chapter 4, Problem 7NP
a)
To determine
The values of the tax-adjusted user cost of capital, the desired future capital stock, and the desired level of investment.
b)
To determine
The tax-adjusted user cost of capital as a function of the real interest rate r, the desired future capital stock, and desired investment as functions of r, and the goods market clearing values of consumption, saving, investment, and real rate of interest.
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Students have asked these similar questions
In an economy the interest rate is 5% and the depreciation rate is 20%. The price of capital is 1. A
firm has the following production function
Y=AKO5N0.5
a. Find the marginal cost of capital
b. Compute the investment desired by the firm, knowing that A=2, K=8, N=1.
c. If the economy is a close economy, what is the amount of national savings? Instead, what if
this was an open economy? Explain.
d. If the government imposes a tax on firm revenues of 25%, how does the investment desired
change? Compute it and show what happens in the Investment-Savings diagram, assuming
this is an open economy and the government completely waste the revenues of this tax.
In a closed economy with no government, use the following information to
compute the long run level of total consumption, not per-worker
consumption
You are given:
The production function F(K,Lt)=KLa
The share of national income paid to owners of capital: a=4
The rate of depreciation: 6=3
The rate of savings s .5
The initial capital stock Ko=1
The labor supply Lt 5 for all t >0
Do not round any intermediate calculations.
Please give an exact answer. This question will accept any answer within 0.1
of the exact answer.
Q6: If the Marginal Propensity to save (MPS) is the following function of income:
1
S'(Y)
= 0.1– 0. 2 Y2,
= 0. 1
and if the aggregate saving S is nil when income Y is 70, find the Saving
function S( Y).
1
Q7: Suppose that the net investment flow is described by the equation I(t) = 6t7,
and that the initial capital stock, at time t= 0, is K(0). What is the time path of capital
К?
1
Q8: If I(t)
= 3000t7 (thousands of dollars per year) -a nonconstant flow- what
will be the capital formation during the time interval [1, 4], i. e. during the second,
third, and fourth years?
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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