Suppose that the production function for an economy is given by Y = K1/4L3/4. The depreciation rate is 4%, the saving rate is 12%, Explain how the economy goes from one steady state to another.
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Suppose that the production function for an economy is given by Y = K1/4L3/4. The
Explain how the economy goes from one steady state to another.
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- Suppose that the production function for an economy is given by Y = K1/4L3/4. The depreciation rate is 4%, the saving rate is 12%, Show the steady state in a graph. In the same graph, show the effect of a decrease in the depreciation rate, say to 2%Consider an economy’s production function is Y=K^1/3 N^2/3 and that both the saving rate and the depreciation rate are equal to 0.15. A. What is the steady-state level of capital per worker? B. What is the steady-state level of output per worker? Now suppose that the economy has reached its steady-state in period t, and then, in period t+1, the saving rate doubles to 0.30. The depreciation rate remains constant at 0.15. C. Solve for the new steady-state levels of capital per worker and output per worker. D. Calculate the path of capital per worker and output per worker over the first three periods after the change in the saving rate.Suppose that production in an economy is represented by the production function Y = K1/4. If the investment rate is equal to 0.25 and the depreciation rate is equal to 0.10, calculate the steady-state levels of capital and output.
- An economy has production function Y = K¹/2L¹/2, a savings rate of 60 percent. There is no technological progress or labour force growth. The depreciation rate initially 10 percent, increases to 40 percent. There are 400 workers in this economy. When the depreciation rate is 40 percent, output will be equal to dollars.Suppose Westeros produces output according to the production function: Y = √K The fraction of output that is saved and invested in new capital is 20%. The depreciation rate is 5%. Use this information to answer the following questions. Macmillan Learning a. What is the steady-state amount of capital (K) in Westeros? b. What is the steady-state amount of output (Y*) in Westeros? c. If Westeros had started out with 25 units of capital, what would the Solow model predict would happen to its output in the long run? O It will decrease, since that is above its steady state level of output of 4 It will decrease, since that is above its steady state level of output of 16 It will increase, since that is below its steady state level of output of 16 It will increase, since that is above its steady state level of output of 41 It will remain at 25, since that is its steady state level of outputda qaoudon Suppose that the production function is given by Y=05/K √N, where Y is output, K is capital, and N is the number of workers. The steady-state level of capital per worker in terms of the saving rate, s, and the depreciation rate, 6, is KIN= (Property format your expression using the tools in the palette. Hover over tools to see keyboard shortcuts. E.g. a superscript can be created with the character.) The steady-state level of output per worker in terms of the saving rate, s, and the depreciation rate, 6, is VIN= (Property format your expression using the tools in the palette.) The equation for steady-state consumption per worker in terms of the saving rate, s, and the depreciation rate, 6, is CIN=(Property format your expression using the tools in the palette.)
- Question 2Assume production function is given by:Y= K(1/2) L(1/2)a. Write the production function in per worker terms (y=f(k))b. Assume that the per worker level of capital in the steady state is 4, the depreciation rate is 5% per year, and population growth is 5% per year. Does this economy have “too much” or “too little” capital? How do you know? [Show your work].Consider an economy with a Cobb-Douglas production function Y= K1/3 2/3, the rate is 15% Calculate the golden rule steady state capital per worker (koR). Round the numbers up to two decimals 3.18 b.5.18 02.18 od 4.18 growth rate of population is 2%, the rate of capital depreciation is 5%, and the saving4. If the production function is given by Y=K2L'3 and the saving rate saving rate (s) equals the depreciation rate (8). Find the numerical values of the steady state capital and output?
- Suppose that the production function for an economy is given by Y = K1/4L3/4. The depreciation rate is 4%, the saving rate is 12%, Suppose that now there is labor augmenting technology, the rate of labor-augmenting technological is 2 percent. At what rate does total output, output per worker, and output per effective worker grow?Solve for the steady state of K with: An Investment (I) function with a rate of growth of 0.4 times the square root of K and a depreciation (D) function of 0.03 * K. Now graph what this looks like. Hint: you need to set the production function equal to the depreciation function and solve for k.An economy has the per-worker production function yt=f(kt)=4kt)0.4, where yt is the output per worker and kt is the capital-labor ratio. The depreciation rate is 0.15, and the population growth rate is 0.04. Saving is St=0.5Yt, where St is total national saving and Yt is total output. The slope of the per worker production function is given by f' (kt)=1.6kt-0.6 . What is the steady state value of capital-labor ratio, k*? Round your answer to at least 2 decimal places.