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Please HELP !! Question 1. (20 points) Suppose, we can use a Cobb-Douglas production function to estimate real national output or real GDP (Y) of
Please HELP !!
Question 1. (20 points) Suppose, we can use a Cobb-Douglas production function to estimate real national output or real GDP (Y) of the US economy as Yt=AKL1, where t indicates the year. Here K indicates total capital input and L is total labor, and we have =25% or 0.25 . Also, we know the coefficient of A is the total factor of productivity (TFP). As a benchmark, the value of A=2 in 2021. Thus, the production function of real GDP in 2021 can be expressed as Y2021=2KL1. Here we assume is constant (has the same value =0.25 ). (1) In 2022, due to uncertain in global supply chains, total factor of productivity (A) fell to 1.95 . Also, we know capital input (K) of 2022 increased by 8% and labor input (L) of 2022 increased by 2.5% compared with their levels in 2021 . Then how much was real GDP growth rate in 2022 ? Note: Use 2021's real GDP as a benchmark and estimate growth rate based on the level of 2021. (2) We have consumer price index (CPI) in 2021 equals 262.65 and CPI in 2022 is 282.60. With the two CPI values, we can calculate yearly inflation rate from 2021 to 2022 . If we assume the velocity of money (V) being constant, then how much was money supply (M) growth rate in 2022? Also, from the perspective of neoclassical economics, which variable, the Nominal GDP or Real GDP, is affected by changes of money supply in the long-run, and why? Question 1. (20 points) Suppose, we can use a Cobb-Douglas production function to estimate real national output or real GDP (Y) of the US economy as Yt=AKL1, where t indicates the year. Here K indicates total capital input and L is total labor, and we have =25% or 0.25 . Also, we know the coefficient of A is the total factor of productivity (TFP). As a benchmark, the value of A=2 in 2021. Thus, the production function of real GDP in 2021 can be expressed as Y2021=2KL1. Here we assume is constant (has the same value =0.25 ). (1) In 2022, due to uncertain in global supply chains, total factor of productivity (A) fell to 1.95 . Also, we know capital input (K) of 2022 increased by 8% and labor input (L) of 2022 increased by 2.5% compared with their levels in 2021 . Then how much was real GDP growth rate in 2022 ? Note: Use 2021's real GDP as a benchmark and estimate growth rate based on the level of 2021. (2) We have consumer price index (CPI) in 2021 equals 262.65 and CPI in 2022 is 282.60. With the two CPI values, we can calculate yearly inflation rate from 2021 to 2022 . If we assume the velocity of money (V) being constant, then how much was money supply (M) growth rate in 2022? Also, from the perspective of neoclassical economics, which variable, the Nominal GDP or Real GDP, is affected by changes of money supply in the long-run, and why Step by Step Solution
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