Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The nominal interest rate is equal to i=0,04, and the rate of depreciation of capital is d=0,09. The price of capital equipment is equal to

image text in transcribed

The nominal interest rate is equal to i=0,04, and the rate of depreciation of capital is d=0,09. The price of capital equipment is equal to the overall price level. Both price levels are expected to grow at the rate equal to n=0,01. The production function is given by Y = (AKL)0,75, where A is technology, L is labor and K is capital stock. The level of output is equal to 1600. Assume that the capital stock is always at the desired level. (Please fill in numbers; use a comma as a decimal separator: 10,5) 1. The real value of the user cost of capital is equal to 16 x x 2. If an increase in productivity of capital increases output by 160, the desired capital stock increases by 3. Suppose that Y=1600, i=0,04, d=0,09, 1=0,01 when the government imposed a tax on the profits of corporations at the rate of 0,25. The change in the desired capital stock is x The nominal interest rate is equal to i=0,04, and the rate of depreciation of capital is d=0,09. The price of capital equipment is equal to the overall price level. Both price levels are expected to grow at the rate equal to n=0,01. The production function is given by Y = (AKL)0,75, where A is technology, L is labor and K is capital stock. The level of output is equal to 1600. Assume that the capital stock is always at the desired level. (Please fill in numbers; use a comma as a decimal separator: 10,5) 1. The real value of the user cost of capital is equal to 16 x x 2. If an increase in productivity of capital increases output by 160, the desired capital stock increases by 3. Suppose that Y=1600, i=0,04, d=0,09, 1=0,01 when the government imposed a tax on the profits of corporations at the rate of 0,25. The change in the desired capital stock is x

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Contemporary Economics An Applications Approach

Authors: Robert Carbaugh

8th Edition

1138652199, 978-1138652194

More Books

Students also viewed these Finance questions

Question

What is the big picture and why is it important for entrepreneurs?

Answered: 1 week ago