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You observe the following facts about a fictional economy: The capitaloutput ratio is 3. The country uses 15% of GDP to replace depreciated capital. The average growth rate of the economy is 2.5 percent. The capital share of output is 35%. Assume that the economy is at a steady-state, and that its output is produced by a Cobb-Douglas production function. a) What is the rate of depreciation in this economy? b) What is the saving rate in this economy? c) What is the marginal product of capital in this economy? d) What is the GOLDEN RULE marginal product of capital in this economy? Compare to your answer to part c) and interpret (that means you should talk about what it means if they are not the same and what the economic implications are). e) Let us say this country changed its saving rate to arrive at the GOLDEN RULE steady state. What would be the new capital-output ratio at the GOLDEN RULE steady state? f) What is the saving rate required to reach the GOLDEN RULE steady state?
Before entry, an incumbent earns a monopoly profit of Pm = 10 million. If entry occurs, the incumbent and an entrant each earn the duopoly profits Pd = 3 million. Suppose the incumbent can induce the government to require all firms to install polluti..
You were told that a certain cash flow sequence started at $3000 in year 1 and increased by $2000 each year. How many years were required for the equivalent amount worth of sequence to be $12000 at an interest rate of 10% per year?
What is the value of the monetary base given the value of deposits at all depository institutions equals $2265.83 billion, currency is $1144.60 billion, and bank deposits held at the Fed are $1422.30 billion?
The world Trade organization either a. requires members to charge the same prices on goods traded internationally or b. requires members to reduce tariffs and eliminate non tariff barriers?
A publisher is considering launching a new magazine for women in the 18–25 years age group. It is thought to be vital to the long-term success of the magazine that its sales should reach break-even point within its first year. Explain why the estimat..
Consider how the economy may be influencing your life. What has the most impact on you? Has a similar economic condition happened in the past? What is the likelihood it could happen again? What should you do to prepare for the next period of economic..
Fight unemployment and close a recessionary gap the fed is
According to the Wall Street Journal, the US Department of Commerce has "decided that display prices by Japanese companies in their home market may be artificially low. Rather than comparing US prices with Japanese prices, Commerce is now coming up w..
The costs of inflation include:
What is the value of a preferred stock that pays a perpetual dividend of $100 at the end of each year when the interest rate is 6 percent?
What price are individuals with $5,000 in the bank willing to pay for the insurance. Will those with $5,000 in the bank voluntarily purchase insurance.
Discuss the elements the led to the successful northern commercialization of agriculture and the differences between the northern commercialization and southern commercialization of agriculture.
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