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Show that in the simplied version of the Romer model, there is a balanced growth path. Follow the steps:
a) Using the production function show that if the growth rates of K, and A are constant, then the growth rate of Y will also be constant.
b) In the previous exercise you have already shown that A grows at a constant rate in the long-run. So, all that is left is to show that K will grow at a constant rate in the long-run. Use the capital accumulation equation to show that ˜k = K/ALY is constant in the long-run. Then, argue that it follows that K must be growing at a constant rate.(Hint: Look at how the steady state capital accumulation is derived in the Solow model in Chapter 2.)
c) Show that in such a balanced growth path gy = gk = gA (where gx denotes the growth rate of any variable x in the balanced growth path).
Consider the following cost relationships for a single-product firm: C(q) = 50 + 0.5q for q ≤ 7 C(q) = 7q for q > 7. Derive average and marginal cost for all integer outputs (from 1 to 7) less than or equal to 7. What are the average and marginal cos..
Which of these is logically impossible (when there are no liabilities): A) Large wealth but small money holdings B) Large wealth but small saving. C) Large saving but small money holdings. D) Large money holdings but small wealth. E) Large income but..
Now suppose the economy currently produces 2,500 garments of clothing and 3,000 bushels of wheat, illucidate which is represented by point B. Under these conditions, the opportunity cost of producing an additional
The price of equipment is 25,000 today. Determine the price of the equipment 3 years from now, if deflation rate is 2% in the first year and inflation rate is 1% in the second year and 4% for the third years
The theoretical model of the inter temporal budget constraint for the U.S. economy as a whole suggests that the most common pattern seems to be that: the quantity of?... or the result of?..
Suppose a manufacturer is a monopoly. This manufacturer produces a good at MC = 4 and sells it to a retailer. The manufacturer has no fixed costs. The retailer is also a monopoly, and it sells the good bought from the manufacturer to consumers. What ..
Farm workers in Oaks Farmville face a 1/198 probability of death at work and each of them receives a yearly wage of $61,000. Farm workers in Valley Farm face a 1/54 of death at work. Assume that both kinds of job require the same level of skills, eff..
Find the Following: Average Product of Capital, Average Product of Labor, Marginal Product of Capital, and Marginal Product of Labor. Given: Q = 10 K^0.3 L^0.7.
Ilustrate what is the marginal propensity to consume (MPC).
Describe each of the following economic functions of money and provide an example of each: (1) medium of exchange; (2) standard of value; and (3) store of value.
What is the concept of data compression? Define a type of data compression and the steps involved.
Assume that the marginal cost of providing an entrée to a customer does not depend on the time of day or the age of the customer.
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