Taste shocks in the additive Ramsey model. Consider an economy with infinitely lived individuals. There is no population growth, and the population size is normalized to one. Individuals live forever and maximize at time t:
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Taste shocks in the additive Ramsey model. Consider an economy with infinitely lived individuals. There is no population growth, and the population size is normalized to one. Individuals live forever and maximize at time t:
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- While individuals face trade-offs in consumption, as shown by the budget constraint. there is no such trade-off for society in terms of production or consumpotion True FalseThe US government announced on October 14th, 2020 that Social Security checks for all US seniors will rise by 5.8% in 2022, the largest increase since 2008. This cost of living adjustment (COLA) is based on the Consumer Price Index measure of inflation in 2021. a). Show with a graph and a model how, in theory, giving seniors the full 5.8% increase will actually make a representative senior better off in 2022 as compared to 2021. If lifespan projections are roughly correct, it is expected that our 52 million current seniors over age 65 is expected to rise by 60% over the next 25 years to about 80 million seniors. Medicaid, Medicare and Social Security are currently 12% of GDP, but expected to rise to 17% of GDP by year 2044.b). Could this enormous increase in spending on seniors have an effect on either US market efficiency or productivity in as we move toward the year 2044?List two real-world instances in which rational function or equation is being employed. Also, state how rational function is being applied in each real-life event.
- Consider the model where an individual has wealth k which they can either save or consume. If they save it, they receive a fixed and exogenous return r. The instantaneous utility function is given by: u(c, k) = c + a(k) where c is consumption, k is wealth, and a(k) is a function that defines the utility that an individual gets from holding wealth. The growth in wealth is given as the returns on wealth rk, plus income from working z(t), minus consumption c(t). a. Write out the differential equation for wealth. b. For an infinite time model, set up the optimal control problem with discounting at a rate 8. c. Write the current-valued Hamiltonian of this problem. d. Derive the steady-state level of consumption.Consider a Robinson Crusoe economy. Robinson is a representative agent with utility function: u(c, r) = cr, where c is coconuts, and r is leisure. In order to produce coconuts, technology dictates the production, which is given by c = avL, where a is some constant, and L is labour. Suppose that a=2. Finally, there is a time constraint: r+L=21 for the consumer. Also the consumer has income of 9. Consider a competitive labour market. Given the wage rate, w=1, the consumer would like to supply 2 decimal places.) units of the labour input. (Answer just the number up toWhich of the following is NOT a characteristic of a typical positive economic model? Group of answer choices the assumption that people weigh the costs and benefits of their various alternatives realistic assumptions makes predictions that can be proven false makes assumptions that ignore the complexity of behavior A regression estimates that Q = 35 - 0.1 ∗ X, where Q is the quit rate, X is the number of employees at the firm. This indicates that doubling the number of employees from 100 to 200 will reduce the quit rate by Group of answer choices 35% points. 50% points. 5% points. 10% points. Because workers have varying preferences about the type of work they like to do, Group of answer choices the firm supply curve for chefs is vertical. the market supply curve for chefs is upward sloping. the market demand curve for chefs is downward sloping. the firm supply curve for chefs is horizontal. Year Average Nominal Wage…
- Tourism Economics also explores the concept of seasonality, which refers to the fluctuating demand for tourism services throughout the year. Many destinations experience peak and off-peak seasons, impacting businesses' revenue and employment levels. For instance, a ski resort may see high demand in winter but low demand in summer. This seasonality can create challenges for sustainable economic development in tourism-dependent regions. To address these challenges, destinations often: A) Close during off-peak seasons B) Develop alternative tourism attractions for different seasons C) Ignore the impact of seasonality D) Focus only on peak season revenueWhich of the statements best describes an exogenous variable in an economic model? An exogenous variable is a variable whose value does not have a relationship with the other variables in the model. An exogenous variable is a variable whose value is not included in the model An exogenous variable whose value does not change as the state of the economy changes An exogenous variable is a variable whose value does change as the stae of the economy changesThe Pareto efficiency is a simple idea, but it is difficult to achieve. Why is this? Provide an example from outside your
- Pareto efficiency, or Pareto optimality, is an economic state where resources cannot be reallocated to make one individual better off without making at least one individual worse off. Pareto efficiency implies that resources are allocated in the most economically efficient manner, but does not imply equality or fairness. An economy is said to be in a Pareto optimum state when no economic changes can make one individual better off without making at least one other individual worse off.To simplify analysis and discussion the model for general equilibrium uses the two person, two goods and two resources (or 2 X 2 X 2 model). The investigation is done in three steps:• Consumption efficiency • Production efficiency• A combination of Consumption and Production efficiencies. Critically analyze the concept of Pareto efficiency. Use relevant theory and diagrams to support your analysis.Which of the following is NOT an endogenous variable in the Romer model? The stock of knowledge The number of workers engaged in research The fraction of the population engaged in research Outputa) A planner in a small, open economy has a utility function U = x1X2 and production takes place according to the production functions Y1 = 10L, – 0.5L Y2 = 10L2 – L The world prices of the goods are p1 10 and p2 5. The total amount of labour %| %3D available in the economy is 5 units. (i) Formulate the Lagrange equation. (ii) Write down the Karush-Khun-Tucker conditions. (iii) Determine a possible solution.
