What is the steady-state capital per worker

Assignment Help Macroeconomics
Reference no: EM132655461

Suppose that the production function is Y = zK 1 2N 1 2 and that 8% of capital wears out every year. Assume that the rate of growth of the population is 2% and the saving rate is 20%.

(a) If z = 2, what is the steady-state capital per worker, kss, the steady-state output per worker, yss, the steady-state consumption per worker, css, and the steady-state investment per worker, iss?

(b) What is the steady-state growth rate of the capital per worker, kss, and the steady-state growth rate of the output per worker, yss? And what is the steady-state growth rate of the capital stock, Kss, and the steady-state growth rate of the aggregate output, Yss? Show your work.

(c) What is the golden rule level of capital, k ? , and the savings rate associated with the golden rule level of capital, s ? ? Can the country increase the consumption per-capita by changing the saving rate?

(d) Now assume that there is no population growth, i.e. n = 0, and that the saving rate is given by some other value called s 0 . Suppose that this economy is in a steady state where the marginal product of capital is less than the depreciation rate. By changing the saving rate is it possible to increase the steady state consumption per-capita? Explain how would you change the saving rate.

Reference no: EM132655461

Questions Cloud

Find the manufacturing cycle efficiency : Find the manufacturing cycle efficiency. Compute the manufacturing cycle time. (Round your answer to 1 decimal places.) Compute the velocity.
Determine all values of the constants : Find the initial temperature of the object and the rate at which its temperature is changing after 10 minutes - Determine all values of the constants
Compute each partner gross income : These premiums of $10,000 have been deducted in calculating the partnership profits of $270,000. Compute each partner's gross income
What is the new equilibrium output level : In the simple Keynesian model with no government or foreign sectors, assume that the economy is in equilibrium at an output level of $2 billion
What is the steady-state capital per worker : Suppose that the production function is Y = zK 1 2N 1 2 and that 8% of capital wears out every year. Assume that the rate of growth of the population
What is the general government balance : What is the General Government Balance, and what is it mean if it is negative (below zero). And how it affect firms (impact on firms ) economical performance?
Compute Rusty correct gross income for the year : Compute Rusty's correct gross income for the year, and explain any differences between your calculation and Rusty's
Discuss challenges to migrate to new automated system : How advances in technology, such as robotic processing automation (RPA), blockchain, artificial intelligence (AI), or data analytics may be used in conjunction
What is the nascent industry argument against free trade : What is the nascent industry argument against free trade? Does the Ricardian model support the nascent industry argument against free trade? Explain.

Reviews

Write a Review

Macroeconomics Questions & Answers

  Inflation targeting be a good policy

Why might it be difficult for the Fed to formally adopt inflation targeting?  Would inflation targeting be a good policy for the Fed in the present economic environment

  In using the taylor rule

In using the Taylor Rule as a guideline for monetary policy, what are the pros and cons of using forecasted values of inflation and output rather than observed values of these variables?

  Describe the present economic crisis situation in europe

Describe the present economic crisis situation in Europe.  Why has it been so difficult for the Europeans to find a solution to this problem?   Comment on what implications the crisis may have for the rest of the world if Europeans are not able to ag..

  Long-term federal government budget problems

Question:. Explain why there are long-term Federal government budget problems. Explain why the base-line forecast of the CBO is misleading.

  Derive and compare demand curve

Question based on Derive and compare demand curve,  Derive Ambrose's demand function for peanuts. How does it compare with Johnny's demand curve for peanuts?

  Problem based on utility function

Problem based on  Utility Function - Problem,  Answer and explain the following using a diagram which is completely labeled.

  Laffer curve : tax rate and tax revenue

Question based on Laffer Curve : Tax Rate and Tax Revenue,  Do raising tax rates necessarily raise tax revenue? What factors affect how tax revenue changes when tax rates change?

  Problem - income elasticity of demand

Problem - Income Elasticity of Demand,  Interpret the following Income Elasticities of Demand (YED) values for the following and state if the good is normal or inferior; YED= +0.5 and YED= -2.5

  Positive balance of payment

Question Positive Balance of Payment: "Things will look good for the US if we could just get to where we are consistently running a positive Balance of Payments."

  Effect of recession on the investment curve

Comment on the effect of a recession on the investment curve (only) and on the level of savings, investment, and the equilibrium real interest rate in the financial crisis that hits United States first starting in fall 2007.

  Affect of falling domestic investment on trade surplus and

How will a fall in domestic investment affect the trade surplus and net capital outflows in the domestic economy, the trade deficit and capital inflows in the rest of the world.

  Crises in the banking sector and bank run

Banking crises crisis decreases depositors' confidence in the banking system. What would be the effect of a rumor about a banking crisis on checkable deposits in such a country?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd