Consumption per worker is 72, depreciation is 12.5%, and capital per worker is 64. Given the production function y = 20 , show that this economy is in a steady state
If the saving rate should double, what is the new steady-state level of consumption per worker?
The steady-state capital-labor ratio k* = . Plugging the values above into this equation yields s = 0.1. Putting the given value of k into the production function yields y = 80, so the given value of consumption per worker implies s = 0.1. This is a steady state. (As further confirmation, note that 64 × 0.125 = 8 = saving, so the loss of capital due to depreciation is exactly restored by investment.) If s = 0.2, then k* = 181, so y = 113, and consumption per worker is 113 × 0.8 = 90.
You might also like to view...
In tit-for-tat, if your partner ________ in your first interaction, then you will ________ in your next interaction.
A. defects; cooperate B. defects; defect C. defects; refuse to play D. cooperates; defect
What is a budget line? What does its slope indicate?
What will be an ideal response?
The average variable cost curve shifts downward if
A) there is a decrease in fixed costs. B) there is a technological advance. C) the cost of a variable input increases. D) the price of output decreases.
Refer to Table 8-12. Consider the following data on nominal GDP and real GDP (values are in billions of dollars): The base year used in calculating real GDP is
A) 2013. B) 2014. C) 2015. D) 2016.