Question
Please help me with these multiple choice questions In the Solow model with technological progress, suppose that the rate of depreciation is 10% per year,
Please help me with these multiple choice questions
In the Solow model with technological progress, suppose that the rate of depreciation is 10% per year, the population growth rate is 2% per year, and the growth rate of technology is 3% per year. Which of the following represents the level of investment needed to maintain a constant capital stock (K) in this economy?
a. 0.02K
b. 0.03K
c. 0.05K
d. 0.10K
Consider the Human Capital Accumulation model with a production function given by =0.50.5, saving rates K=0.16 and H=0.09, a common depreciation rate is =0.05 and =1. Which of the following is false?
a. the long-run intensity of human capital relative to physical capital will fall whenH falls
b. the long run growth rate of physical capital will fall when H falls
c. the long-run intensity of human capital relative to physical capital is 9/16
d. the long-run growth rate of physical capital is 0.12
Suppose that production function is =1/3()2/3 and competitive firms hire capital and labor to produce output. Let r be the return paid to capital and w be the real wage paid to labor. Which of the following is true?
a. a profit-maximizing firm hires capital and labor until average products equal factor prices
b. labor income share is 1/3
c. real return to capital r grows at the rate of productivity growth
d. real wages w grows at the rate of productivity growth
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started