Aggregate production function, Macroeconomics

Assignment Help:

The aggregate production function

Definition

Imagine the national economy during a short period of time (say one week). We refer: 

  • L: total amount of work used during this period (by all individuals in the economy).
  • K: total amount of capital used.
  • Y: total amount of finished goods produced during this period (real).

It is still the case that Y and L are flows whereas K is a stock. During a short period of time, we can presume that amount of capital is constant. 

Aggregate production function, or simply production function is a function which relates L, K and Y. Precisely, we presume that Y is a function of L and K: 

Y = f (L, K)

In most cases, we won't specify exactly what the function f looks like. Though we always presume that f is increasing in L and K, which is, when we use more labour and/or more capital, we would produce more goods.


Related Discussions:- Aggregate production function

Trade, What is the difference between heckscher_olin theory and comparative...

What is the difference between heckscher_olin theory and comparative theory

How aggregate consumption increase, How much more did the average household...

How much more did the average household spend on appliances, electronics, and furniture when it received the 2008 tax rebate? (b) If all 110 million households did so, how much did

What is money supply, What is Money supply The monetary base is only a ...

What is Money supply The monetary base is only a small part of the total money supply but, through the multiplier effect, the central bank's control over the money supply is ma

Keynesian, critically examine the keynesian theory of unemployment

critically examine the keynesian theory of unemployment

What do you mean by exchange rate, Q. What do you mean by Exchange rate? ...

Q. What do you mean by Exchange rate? Exchange rate is defined as the price of one unit of currency in terms of another currency. If one euro costs 1.5 USD then 1 USD costs 1/1

Inflation in germany, Once we have monthly data on a price index we can eva...

Once we have monthly data on a price index we can evaluate the inflation. In most nations, the percentage change in price index during one month is small. Hence it is more common t

Estimating womens labor supply, 1.    Estimating Women's Labor Supply a....

1.    Estimating Women's Labor Supply a.    The following regression was run for an estimate of the current women's labor supply curve: Where h i = hours of labor suppl

MARKET, COMPARE AND CONTRAST CLASSICAL MODEL AND KEYNESIAN THEOTY

COMPARE AND CONTRAST CLASSICAL MODEL AND KEYNESIAN THEOTY

Obtain a histogram of systolic blood pressure, The data set lowbwt.sav co...

The data set lowbwt.sav contains information for a sample of 100 low birth weight infants born in two teaching hospitals in Boston. Measurements of systolic blood pressure are sa

Trends of trade shares, Trends of Trade Shares: India's share in total...

Trends of Trade Shares: India's share in total world exports in 1950 was 1.85 percent and the share in total world imports was 1.7 1 percent. The share of both exports and imp

Write Your Message!

Captcha
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