Question
(1) During the pandemics, the high personal saving rate delayed capital accumulation, though fiscal stimulus package repaired some disrupted credit intermediation. However, total capital stock
(1) During the pandemics, the high personal saving rate delayed capital accumulation, though fiscal stimulus package repaired some disrupted credit intermediation. However, total capital stock (K) grew slowly 5% in 2020. In the labor market, the damage caused by Covid-19 has been the most severe one in recent history. Economic shutdown and laid-off substantially lowered labor supply and participation. Compared with 2019, total labor stock (L) fell 19% in 2020 (or it was 81% of 2019). The only noticeable progress was a fast increase of total factor productivity (factor A), thanks for applications of digital technology. Its value jumped up from 2 of 2019 to a higher value of 2.2 in 2020. According to the information given, how much is the yearly GDP growth rate in 2020 compared with 2019.
(2) Now suppose in 2021, total labor stock (L) recovered to 95% of the 2019 level. And capital stock (K), after several rounds of economic stimulus packages, reached at 108% of the 2019 level. Given the same total factor productivity as 2019 (factor A = 2), how much GDP in 2021 is to the level (%) of 2019? How much is the yearly GDP growth rate from 2020 to 2021?
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