3 Growth Model Suppose that output (Y) in an economy is given by the following aggregate...
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3 Growth Model Suppose that output (Y) in an economy is given by the following aggregate production function: Y = K+N where K, is capital and N, is the population. Furthermore, assume that capital depreciates at rate 8 and that savings is a constant proportions of income. You may assume that 8 > s. 1. Suppose that the population remains constant. Solve for the steady-state level of capital per worker. 2. Now suppose that the population grows at rate n. Solve for the steady-state level of capital per worker. 3. Based on your answer to part 2) above, solve for the steady-state growth rates (in terms of n) of the following: (a) capital per worker (b) output per worker (c) capital (d) output 3 Growth Model Suppose that output (Y) in an economy is given by the following aggregate production function: Y = K+N where K, is capital and N, is the population. Furthermore, assume that capital depreciates at rate 8 and that savings is a constant proportions of income. You may assume that 8 > s. 1. Suppose that the population remains constant. Solve for the steady-state level of capital per worker. 2. Now suppose that the population grows at rate n. Solve for the steady-state level of capital per worker. 3. Based on your answer to part 2) above, solve for the steady-state growth rates (in terms of n) of the following: (a) capital per worker (b) output per worker (c) capital (d) output
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1 When population is constant N is fixed Y K steady state condition I K I sY sY ... View the full answer
Related Book For
Macroeconomics
ISBN: 978-0321675606
6th Canadian Edition
Authors: Andrew B. Abel, Ben S. Bernanke, Dean Croushore, Ronald D. Kneebone
Posted Date:
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