I. (36 pts) Long Math/Graph. Answer all parts of the question below. Show all work. LABEL carefully and NOTE UNITS 1. (22 points) Show your work and note your units. Suppose the US economy has a production function of Y = AKOL.. Gather the following data from the BEA website for "Real Gross Domestic Product, Chained Dollars" and the "Implicit Price Deflator for GDP" (both under "GDP & Personal Income," Section 1), and "Current-Cost Net Stock of Fixed Assets" (nominal capital stock) (under "Fixed Assets, " Section 1). Then calculate the real capital stock (note that the data for the real capital stock is not given for the years before 1999, so you will have to calculate). The labor hours (annual total non-farm) data is in an Excel file on Collab/Resources ("Hours of Wage and salary workers"). 0.5 pts each, 5 pts total) 1990 1991 Real GDP (billions of chained 2012 A. F. dollars) Current-Cost Net Stock of Fixed B. G. Assets (Nominal Capital Stock) Implicit Price Deflator for GDP C. H. Real Capital Stock (billions of chained | D. I. 2012 dollars) Labor (billions of hours) E. J. D. Calculate the real capital stock for 1990 (to one decimal ). I. Calculate the real capital stock for 1991 ( to one decimal ). K. (2.5) What is A (round to 2 decimals) for 1990 and 1991? 1990: A = 1991: A = The Gulf War began August 2, 1990, and ended February 28, 1991. The price of a barrel of oil more than doubled at the start of the war. How might this explain your data? L. (2) What was the marginal product of labor (MPL) for 1990 and 1991 (round to 2 decimals)? 1990: MPL - 1991: MPL =M. (12.5) Draw a graph of real GDP as a function of labor for 1990 and 1991. Below it, draw a graph of the labor market and show the equilibrium real wage rate and equilibrium quantity in 1990 and 1991. Label your 1990 equilibrium point "A" in both graphs, and your 1991 equilibrium point "B" in both graphs. Show how the equilibrium quantity in the labor market determines the level of real GDP in the production function. Does not need to be to scale.2. (14 points) Cross country comparisons of labor productivity. Show all work, LABEL carefully and NOTE UNITS. Country Labor Real GDP Real Capital Total labor Capital- MPK (2019) productivity per hour Stock, K hours, L Labor Ratio, (to 3 Function Ratio, y (in millions of (millions of decimals) US Dollars) hours) Hungary 1 = 4.9340.4 B. 1,436,131.6 6,941.5 A. C. Germany y =7.44104 B. 20,957,202.0 52,998.2 A. C. Suppose that Hungary and Germany have the labor productivity functions, real capital stock, and total labor hours given in the table above. A. (1) Calculate the capital-labor ratio, & (round to 2 decimals). Hungary: Germany B. (2) Calculate real GDP per hour, y (round to 2 decimals). Hungary: Germany C. (3) Calculate the marginal product of capital, MPK (round to 3 decimals). Hungary: GermanyD. (5) Graph the labor productivity functions for each country on the graph below. Include all relevant information from A- C above, and label your graph carefully (need not be to scale). E. (3) If the MPK for Germany converges to the MPK for Hungary, calculate the new level of & in Germany (to 2 decimals). Explain whether labor productivity and the capital-labor ratio will also converge