Relative to the slope of the depreciation line

Assignment Help Business Economics

Reference no: EM131007377

Consider the Golden Rule level of capital. Suppose a country found out that they are overcapitalized, that is their current steady-state capital stock per worker is greater than the Golden Rule level.

a) What does that imply for their level of MPK relative to the slope of the depreciation line? Explain.

b) What should this country do, if anything? What would be the result for i) consumption, ii) output and iii) investment. To answer this draw graphs showing the evolution of those variables over time in the style of Figure 8-10 on page 230.

c) Do you think it would be a realistic prospect to attempt to make those changes in a democracy? d) Finally, suppose the country foud out that it had TOO LITTLE capital instead. How would your answers to a), b) and c) change?

Reference no: EM131007377

Questions Cloud

Authority-compliance management and team management : In the Leadership Grid, employees preferred which of the following styles? A. Country club management B. Middle-of-the-road management End of exam C. Authority-compliance management D. Team management

An incredible inflation reducing policy : Do economists still believe in the menu view of the Phillips Curve? What view has replaced the original view? Given the new view of the Phillips Curve, why do economists believe that a "credible" inflation reducing policy is less costly than an "incr..

Those quotes and the fair values of the investment : Prepare the journal entries through June 30, 2011, to record the investment in notes, interest, and necessary adjustments for changes in fair value.

Fosters collaboration and communication : Manuela is known throughout her company that she fosters collaboration and communication. She is extremely hands-on with her team. She is an example of a/an _______ leader. A. interactive B. servant C. virtual D. democratic

Relative to the slope of the depreciation line : Consider the Golden Rule level of capital. Suppose a country found out that they are overcapitalized, that is their current steady-state capital stock per worker is greater than the Golden Rule level. What does that imply for their level of MPK relat..

Analyzing an organization using nadler &tushman’s model : Use the Nadler &Tushman’s congruence model to describe your organization or an organization you are familiar with. Categorize the key components of the environment, strategy, tasks, formal system, and key individuals. What outputs are desired? Are th..

Market equilibrium price for a basic medical check-up : Suppose that the market equilibrium price for a basic medical check-up is $50, in a market in which there is no health insurance. To encourage more people to get a check-up, the local government mandates that the price of a check-up cannot be more th..

Monopoly consumer durable company faces demand curve : A monopoly consumer durable company faces a demand curve (in $) for its branded product described by P = 20 - 3Q. Its average variable cost equals $2 everywhere, up to its capacity level of 20 units of output. Fixed costs are equal to $10. There is n..

Sociology : Identify your in-groups and out-groups. Explain how have your in-groups influenced the way you see the world? And what influence have your out-groups had on you?

User Account

All Pages