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50 A 91% Fri 12:20 PM Q canvas.ucdavis.edu ECN 101 -VERSION A VitalSource Bookshelf: Macroeconomics (Fif... Course Her 1-WQ-2022-A-1.pdf & TA 6 > M, #7M
50 A 91% Fri 12:20 PM Q canvas.ucdavis.edu ECN 101 -VERSION A VitalSource Bookshelf: Macroeconomics (Fif... Course Her 1-WQ-2022-A-1.pdf & TA 6 > M, #7M mis I vile cash up fromle and some money in three years, you ask them TO1 a certain amount of cash each year for the rest of your life beginning next year (you can assume that you will live forever). What amount would they give you annually to equal a present discounted value of $30,000 today? (10 points) 2. Use the Solow growth model of chapter 5 and assume that a = 1/3. In other words the production function is given by Y = AK1/312/3. Due to a horrible pandemic, L falls by 50%. a. Show graphically how this affects K* and Y*. (10 points) b. Using the formulas for the steady state levels of capital and output, compare the capital stock, K*, and output, Y*, after the drop in the population L. (10 points) Graph the level of output (y-axis) over time (x-axis) before and after the change in L (ideally in a "ratio scale"). (10 points) 2.108 50 4
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