Figure 2: Question d 1940-1960, Coef: -2.41 SE: .11 1990-2010, Coef: -.99 SE: .28 KiGAN OMKS wyl Annual Inc Growth Rate, 1990-2010 Annual Inc Growth Rate, 1940-1960 WY LA SD MS AR MT MA NOT OK TX KS ONRE MD KY TN 50+ IBC NJ CT ANCOR CA CT OHFL MI NV DE DE O CO - 10 10.4 10.8 Log Income Per Cap, 1940 Log Income Per Cap, 1990 Figure 3: Question e Where the Money Goes Federal spending as a percentage of GDP, 1947-2047 National Defense Major Entitlements All other 25% 20 15 10 5 1950 '65 '80 '95 '10 25 Note: 2018-2047 projections Sources: CBO, U.S. federal budget, author's calculations (e) (5 points) Consider Figure (3) which tracks three kinds of federal government transactions - na- tional defense spending, non-defense spending (all other - highways, schools, parks, NASA, etc), and major entitlement outlays (medicare, medicaid, social security, etc). From the chart we can conclude that in the GDP expenditure definition, Y = C+I+G+ NX i. The share of G in Y is currently at historic lows. ii. The share of G in Y has begun to explode iii. The share of C in Y is declining. iv. Inflation is increasing. (Choose one)(c) (5 points) Consider Figure ( 1) (from Homework 2) which depicts the path of non-farm business sector labor share. Figure 1: Question c M'shunch\" urn-u lm l E IN 1 mu law on In H I" III I". I\" I" M m III III III II III II, \"I. I\" Min-MILE\"- \"lummm m\" If the US is assumed to be characterized by a Cobb-Douglas production function, Y = Affair/1'\(f) (5 points) Categorize the following into (a) Rival vs Non-Rival and (b) Excludable vs Non Exclud- able. R/NR Ex/Non Ex Using Facebook Kayaking on LSU lakes Using Windows 10 Operating System Grandma's secret cake recipe (g) (5 points) Briefly assess the following statement "Perfect Competition and Sustained Economic Growth are Mutually Incompatible"Question 1: Short Answer Questions . .... 35 points (a) (5 points) Consider a country whose growth rate of output is 0% a year, labor force (L) growth is 1% a year, and TFP growth is 1% a year. Labor force composition (Lyt/ Lt) has not changed. Assuming a standard Cobb-Douglas production function, Yt = AtK,/Lots, calculate this country's capital per worker (K/L) growth rate. (b) (5 points) Consider the following data on Honduras and US GDP per capita in the year 2015 in their respective local currencies. GDPpc (local currency) USA 53,125 US$ Honduras 87,164 Lempiras 1 US dollar was equal to 21.24 Honduran Lempiras in the foreign exchange market. Calculate Honduras' relative GDP per capita to the US using market exchange rates. Further, overall prices in Honduras were 0.57 times that of the US. Calculate Honduras' relative real GDP per capita to the US. What can we infer