,Answer all.

What is the current GDP growth rate for the U.S.? Examine the trend over the past few years. What trends interest you? What stage of the Business Cycle would the U.S. economy be in currently given the trends? Why might GDP not be considered an accurate measure of economic well-being of a country? Identify at least three limitations of GDP as a measure of economic well-being.

Question 1 (20 points) Consider the standard neoclassical growth model in discrete time. There is a large number of identical households normalized to 1. Each household wants to maximize life-time discounted utility U((a) .) = Bu(a), BE (0, 1). Each household has an initial capital ko at time 0, and one unit of productive time in each period that can be devoted to work. Final output is produced using capital and labor, according to a CRS production function F. This technology is owned by firms (whose measure does not really matter because of the CRS assumption). Output can be consumed (c) or invested (it). Households own the capital (so they make the investment decision), and they rent it out to firms. Let o E (0, 1) denote the depreciation rate of capital. Households own the firms, i.e., they are claimants to the firms' profits, but these profits will be zero in equilibrium. The function u is twice continuously differentiable and bounded, with u'(c) > 0, u"(c) 0, f"(x)