Reference no: EM132405761
1. An economy has government purchases of 2000. Desired national saving and desired investment are given by
Sd = 200 + 5000r + 0.10Y - 0.20G
Id = 1000 - 4000r
When the full-employment level of output equals 5000, then calculate the real interest rate at which the goods market is in equilibrium
2. Use the growth accounting equation to calculate productivity growth, given output growth of 4.5%, capital stock growth of 4%, labor employment growth of 3%, the output elasticity of capital of 0.3, and the output elasticity of labor of 0.7.
3. A country has the per-worker production function yt = 5kt0.5, where yt is output per worker and kt is the capital-labor ratio. The depreciation rate is 0.2 and the population growth rate is 0.05. The saving function is St = 0.2Yt, where St is total national saving and Yt is total output.
(a) What is the steady-state value of the capital-labor ratio?
(b) What is the steady-state value of output per worker?